Rivalry Dynamics: Unveiling Alternative Motivations Behind Nations’ Arms Competition

Abstract

Purpose: The study aims to explore the complex dynamics of the arms race (AR) between Pakistan and India, with a primary focus on examining various arms race models.

Research Gap: No study in the current body of literature regarding the perspectives from Pakistan and India has comprehensively utilized all iterations of the Richardson Reaction model of the arms race, except for Hollist (1977), which did incorporate all versions of the Richardson Reaction model. However, in this particular study, the author merely compared R² and F-statistics across four pairs of nations.

Design/Methodology/Approach: The study consists of eight mini-models. The first six models have been estimated through OLS while in the last two models, we have adopted the GMM technique. The study used the data from Handbook statistics of Pakistan and India from 1972 to 2020.

The Main Findings: Our study highlights that a country’s own previous year’s military spending inversely affects its current military outlays, while its opponents’ expenditures positively influence its military budget. The disparity between a country’s and its opponents’ military spending, as well as submissiveness, play significant roles. Moreover, real external debt negatively impacts military expenditures, while real GDP positively influences them.

Theoretical/Practical Implications of the findings: The implications suggest that the decisions about military expenditure are affected by both internal and external aspects, including past expenditures and the military capabilities of adversaries. The study highlights the relevance of economic growth as a determinant of military spending decisions.

Originality/Value: The originality and value of the study lie in a comprehensive utilization of all versions of the Richardson model, employing the advanced technique of the Generalized Method of Moments (GMM).