Abstract
Chapter 6 discussed several factors associated with arms production and arms imports. One of the major findings of that chapter was the apparent association between resource constraints, arms production, and arms imports. In general, it appeared that arms producers1 tend to be countries that have sufficient foreign exchange2 to support a continuing stream of imported components and support for their military industries. On the other hand it appeared that non-producers were relatively constrained in terms of available foreign exchange.3
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Notes and References
Here again we are using the classification of producers along the lines suggested by Neuman. Cf. Stephanie Neuman, ‘International Stratification and Third World Military Industries’, International Organization, (Winter 1984), pp. 167–98.
This was also confirmed in Robert Looney and P. C. Frederiksen, ‘Profiles of Current Latin American Arms Producers’, International Organization (Summer 1986), pp. 745–52. This chapter is an expanded version of that paper.
This point is elaborated on in Robert Looney, ‘Prospects for Future Latin American Producers’, Current Research on Peace and Violence (1988, forthcoming).
Ibid., p. 181.
Others include Herbert Wulf et al., Transnational Arms Production Technology (Hamburg: University of Hamburg, 1987); Robert Harkavy, The Arms Trade and International Systems (Cambridge, Mass: Ballinger, 1975); and Ilan Peleg, ‘Military Production in Third World Countries: A Political Study’, in Patrick J. McGowan and Charles W. Kegley (eds), Threats, Weapons and Foreign Policy, Sage International Yearbook of Foreign Policy Studies, vol. 5. (Beverly Hills: Sage Publishers, 1980), pp. 209–30.
Neuman, ‘International Stratification’, p. 185.
Ibid., p. 182.
Ibid., p. 186.
Peter Tehral, ‘Foreign Exchange Costs of the Indian Military, 1950–1972’, Journal of Peace Research (1982), pp. 251–9.
Peleg, ‘Military Production’, op. cit., p. 210.
Ibid., p. 214.
Cf. Ron Ayres, ‘Arms Production as a Form of Import-Substituting Industrialization: The Turkish Case’, World Development (1980), p. 814.
Cf. Bruce Arlinghaus, ‘Social versus Military Development: Positive and Normative Dimensions’, in James Everett Katz, Arms Production in Developing Countries (Lexington, Mass: Lexington Books, 1984), p. 48.
Rodney Jones and Steven Hildreth, Modern Weapons and Third World Powers (Boulder, Colorado: Westview Press, 1984), p. 60.
An interesting application of discriminant analysis to profile Latin American countries that either expropriated foreign investment or not is given in Randall J. Jones, ‘A Model for Predicting Expropriation in Latin America Applied to Jamaica’, Columbia Journal of World Business (Spring 1980), pp. 74–80. Several excellent technical expositions of the multiple discriminant analysis procedure are available. See, for example, Donald C. Morrison, ‘On the Interpretation of Discriminant Analysis’, Journal of Marketing Research (May 1968), pp. 156–63.
Computations were made using the programme designed by the SAS Institute. See SAS Institute, Users Guide: Statistics, 1982 Edition (Cary, NC: SAS Institute, 1982). Country economic and size data presented in World Bank, World Development Report: 1984 (New York: Oxford University Press, 1984). Military variables from United States Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers: 1972–1982 (Washington: USACDA, 1984).
Steven Miller, ‘Arms and the Third World: Indigenous Weapons Production’, PSIS Occasional Paper No. 3, Programme for Strategic and International Security Studies (Geneva: University of Geneva, 1980).
Cf. Albert O. Hirschman, ‘The Political Economy of Import-Substituting Industrialization in Latin America’, Quarterly Journal of Economics (February 1968), pp. 1–32.
James E. Katz, ‘Understanding Arms Production in Developing Countries’, in Katz, Arms Production, pp. 5–7.
David Whynes, The Economics of Third World Military Expenditure (London: Macmillan Press, 1979), pp. 26–7.
Ibid., p. 27.
Emile Benoit, ‘Growth and Defense in Developing Countries’, Economic Development and Cultural Change (January 1978), pp. 271–80.
Ibid., pp. 179–80.
Mary Kaldor, ‘The Military in Development’, World Development, (June 1976), pp. 459–82.
Alice Amsden, ‘Kaldor’s The Military in Development — A Comment’, World Development (August 1977), p. 757.
R. D. McKinley and A. S. Cohen, ‘The Economic Performance of Military Regimes: A Cross-National Aggregate Study’, British Journal of Political Science (July 1976), pp. 291–310.
David Dabelko and J. M. McCormick, ‘Opportunity Costs of Defense: Some Cross-Sectional Evidence’, Journal of Peace Research (April 1977), pp. 145–54.
P. C. Frederiksen and Robert E. Looney, ‘Defense Expenditures and Economic Growth in Developing Countries’, Armed Forces and Society (Summer 1983), pp. 633–45. See also Nicole Ball, ‘Defense Expenditures and Economic Growth: A Comment’, Armed Forces and Society, (Winter 1985), pp. 291–7, and P. C. Frederiksen and Robert E. Looney, ‘Defense Expenditures and Economic Growth in Developing Countries: A Reply’, Armed Forces and Society (Winter 1985), pp. 298–301.
P. C. Frederiksen and Robert E. Looney, ‘Defense Expenditures and Economic Growth in Developing Countries: Some Further Empirical Evidence’, Journal of Economic Development (July 1982), pp. 113–25.
David Lim, ‘Another Look at Growth and Defense in Less Developed Countries’, Economic Development and Cultural Change (January 1983), pp. 377–84.
Ibid., p. 384.
P. C. Frederiksen and Robert E. Looney, ‘Another Look at Defense Spending and Economic Growth in Less Developed Countries’, Defense Analysis (September 1985), pp. 205–10.
In Benoit’s original work, foreign aid was the second variable in the regression equation. Benoit postulated a positive sign for this variable, assuming that aid facilitated growth by loosening the foreign exchange constraint. Since foreign aid has played a relatively minor role over the last decade in Latin America, public external borrowing seems a more appropriate measure of the impact of foreign external savings on country growth. Domestic savings effort on the part of the government as provided by the public sector’s surplus or deficit (as a percentage of GDP) could similarly be assumed to contribute to overall resource availability and thus higher growth. See L. Taylor, Structuralist Macroeconomics: Applicable Models for the Third World (New York: Basic Books, 1983), pp. 130–3.
The t-values appear in parentheses under the estimated coefficients. * indicates statistical significance at the 90 per cent level, and ** indicates statistical significance of the coefficient at the 95 per cent and above level.
The concept of independent binding external and internal constraints on growth was first developed by H. Chenery. See H. Chenery and P. Eckstein, ‘Development Alternatives for Latin America’, Economic Development Report No. 29, Project for Quantitative Research in Economic Development (Cambridge, Mass: Harvard University Press, 1967). For an empirical estimation of the binding constraint (external or internal) on individual Latin American countries, see Luis Landau, ‘Savings Functions for Latin America’, in H. Chenery (ed.), Studies in Development Planning (Cambridge, Mass: Harvard University Press, 1971), pp. 299–321.
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Looney, R.E. (1988). Environments Conducive to Latin American Arms Production. In: Third-World Military Expenditure and Arms Production. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09658-9_9
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