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Preventing plunder: Military technology, capital accumulation, and economic growth

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  • Hendrickson, Joshua R.
  • Salter, Alexander William
  • Albrecht, Brian C.
Abstract
A growing body of research highlights the correlation between strong, centralized states and economic growth. Given the important role that national defense has played in the development of the state, it seems as though this would imply some relationship between military expenditures and economic development. However, there is no consensus on the direction of the relationship between military expenditures and economic growth. In this paper, we propose a resolution to this puzzle. We argue that military technology is a limiting factor for wealth (and therefore capital) accumulation. Since wealth must be protected from plunder and/or destruction, the amount of wealth that can be accumulated is constrained by a society’s ability to adequately defend it. We present a theoretical model consistent with this idea and perform a Monte Carlo experiment to determine the implications of this hypothesis for empirical work. We find that the long-run relationship between military expenditures and private production is positive. However, in sample sizes consistent with existing data, the relationship is ambiguous. As a result, we provide support for this idea by relying on historical examples consistent with our hypothesis. Finally, we consider the implications of our hypothesis for the development of state capacity.

Suggested Citation

  • Hendrickson, Joshua R. & Salter, Alexander William & Albrecht, Brian C., 2018. "Preventing plunder: Military technology, capital accumulation, and economic growth," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 154-173.
    • Handle: RePEc:eee:jmacro:v:58:y:2018:i:c:p:154-173
    DOI: 10.1016/j.jmacro.2018.08.004
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    2. Gert Tinggaard Svendsen, 2020. "Two bandits or more? The case of Viking Age England," Public Choice, Springer, vol. 182(3), pages 443-457, March.
    3. Cai, Meina & Murtazashvili, Ilia & Murtazashvili, Jennifer, 2020. "The politics of land property rights," Journal of Institutional Economics, Cambridge University Press, vol. 16(2), pages 151-167, April.
    4. Harris,Colin & Cai,Meina & Murtazashvili,Ilia & Murtazashvili,Jennifer Brick, 2020. "The Origins and Consequences of Property Rights," Cambridge Books, Cambridge University Press, number 9781108969055, September.
    5. Brian C. Albrecht & Joshua R. Hendrickson & Alexander William Salter, 2022. "Evolution, uncertainty, and the asymptotic efficiency of policy," Public Choice, Springer, vol. 192(1), pages 169-188, July.
    6. Luke Petach, 2022. "A Tullock Index for assessing the effectiveness of redistribution," Public Choice, Springer, vol. 191(1), pages 137-159, April.
    7. Ali Saleh Alarussi & Eng Zhi Yen, 2023. "The Impact of Population Aging on Economic Growthin Asian Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 33-53.
    8. Lee, Jun Gon & Park, Min Jae, 2019. "Rethinking the national defense R&D innovation system for latecomer: Defense R&D governance matrix," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 1-11.
    9. Faried Jaendar Muda & Rajesri Govindaraju & Iwan Inrawan Wiratmadja, 2022. "An Additional Model to Control Risk in Mastering Defense Technology in Indonesia," Sustainability, MDPI, vol. 14(3), pages 1-16, January.
    10. Geloso, Vincent J. & Salter, Alexander W., 2020. "State capacity and economic development: Causal mechanism or correlative filter?," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 372-385.
    11. Hendrickson, Joshua R., 2020. "The Riksbank, emergency finance, policy experimentation, and Sweden’s reversal of fortune," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 312-332.
    12. Ennio E. Piano, 2019. "State capacity and public choice: a critical survey," Public Choice, Springer, vol. 178(1), pages 289-309, January.

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    More about this item

    Keywords

    National defense; Economic growth; Military technology;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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