Author: Gülay Günlük-Şenesen
Publisher/Publication: Turkish Studies
Volume/Issue: 5 (1)
DOI/ISBN: 10.1080/14683849.2004.9687243
Abstract: The author in this paper investigates the existence and nature of an arms race between Turkey and Greece, two NATO allies with a history of conflict and rivalry. He uses a modified version of the Richardson model of arms races, which incorporates economic variables and political factors, to test for the presence of action-reaction behavior in the defense expenditures of the two countries. He employs cointegration and error correction techniques to analyze annual data from 1950 to 1992. The results suggest that there is a long-run equilibrium relationship between the defense expenditures of Turkey and Greece, and that both countries exhibit action-reaction behavior in their defense spending decisions. The paper finds that economic growth, population, and political instability have significant effects on defense spending in both countries. The author concludes that Turkey and Greece are engaged in a costly and inefficient arms race, which hinders their economic development and regional stability. Part of the econometric school of study of the post-1945 Greek-Turkish military expenditure and possible arms racing.