Conflict, Defense Spending and the Number of Nations


Alesina, Alberto, and Enrico Spolaore. 2006. “Conflict, Defense Spending and the Number of Nations.” European Economic Review 50: 91-120.
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This paper provides a formal model of endogenous border formation and choice of defense spending in a world with international conflict. We examine both the case of democratic governments and of dictatorships. The model is consistent with three observations. First, breakup of countries should follow a reduction in the likelihood of international conflicts. Second, the number of regional conflicts between smaller countries may increase as a result of the breakup of larger countries. Third, the size of the peace dividend (the reduction in defense spending in a more peaceful world) is limited by the process of country breakup.

Last updated on 04/03/2013