Journal Article

Global Arms Trade and Oil Dependence*

Vincenzo Bove, Claudio Deiana and Roberto Nistic�

in The Journal of Law, Economics, and Organization

Volume 34, issue 2, pages 272-299
Published in print May 2018 | ISSN: 8756-6222
Published online March 2018 | e-ISSN: 1465-7341 | DOI: https://dx.doi.org/10.1093/jleo/ewy007
Global Arms Trade and Oil Dependence*

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  • International Trade
  • International Relations and International Political Economy
  • National Government Expenditures and Related Policies
  • Non-renewable Resources and Conservation

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Abstract

We investigate how oil dependence affects the trade of weapons between countries. We argue that oil-dependent economies have incentives to transfer arms to oil-rich countries to reduce their risk of instability and, as a result, the chances of disruption in the oil industry. We employ gravity models of the arms trade and estimate the effect of both a local as well as a global oil dependence. Two key results emerge. First, the volume of arms transfers to a specific country is affected by the degree of dependence on its supply of oil. Second, global oil dependence motivates arms export to oil-rich countries even in absence of a direct bilateral oil-for-weapons exchange. Our results point consistently toward the conclusion that the arms trade is an effective foreign policy tool to securing and maintaining access to oil.

Keywords: F10; F50; H56; Q34

Journal Article.  11709 words. 

Subjects: International Trade ; International Relations and International Political Economy ; National Government Expenditures and Related Policies ; Non-renewable Resources and Conservation

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