Instructor Edition | Information Center | Home
The Economics of War
Information Center
Feature Summary
Preface
Table of Contents
About the Author

Feedback
Help Center




Table of Contents

Introduction

Chapter 1:    The War Economy in Theory
            1.1     Introduction
            1.2     The Iron Law of War
                      1.2.1   War Scares People
                      1.2.2   War is Expensive
            1.3     Four-Point Scheme for Evaluating the Economic Effects of War
                      1.3.1   Condition of the Economy prior to the War
                      1.3.2   Location of the War
                      1.3.3   Duration, Cost, and Financing of the War
                      1.3.4   Physical and Labor Resource Mobilization
            1.4     Key Points

Chapter 2:    The War Economy in Reality: Case Studies of Major Wars
            2.1     Introduction
            2.2     Cases that Support the Iron Law of War
                      2.2.1   World War I
                      2.2.2   World War II
                      2.2.3   Korea
            2.3     Cases That Do Not Support the Iron Law of War
                      2.3.1   Vietnam
                      2.3.2   1991 Persian Gulf
                      2.3.3   Iraq
            2.4     Key Points

Chapter 3:    Defense Spending
            3.1     Introduction
            3.2     U.S. Military Expenditures
                      3.2.1   Military Expenditures Compared to other Government Expenditures
                      3.2.2   Composition of the Defense Budget
            3.3     U.S. Military Expenditures and Macroeconomic Performance: The Costs of
                      Disarmament
                      3.3.1   Disarmament's Costs in Theory
                      3.3.2   Evidence of Disarmament's Costs
            3.4     U.S. Military Expenditures and Macroeconomic Performance: The Benefits of
                      Disarmament
                      3.4.1   Disarmament's Benefits in Theory
                      3.4.2   Evidence of Disarmament's Benefits
            3.5     Global Military Expenditures
                      3.5.1   International Comparisons
                      3.5.2   Macroeconomic Impact of Military Expenditure: International
                       Comparisons
           3.6      Exploring the Causes of Militarization
                      3.6.1   Modeling the Security Dilemma
                      3.6.2   Modeling the Economic Impact of an Arms Race
            3.7     Key Points

Chapter 4:    Military Labor Recruitment
            4.1     Introduction
            4.2     Comparing Military Manpower
            4.3     All-Volunteer Force (AVF) vs. Conscription
                      4.3.1   Graphing the Military Labor Market
                      4.3.2   Budgetary Cost and Capital Intensity
                      4.3.3   The Labor Demand Curve as the Marginal Productivity of Labor
                      4.3.4   The Labor Supply Curve as the Willingness to Join
                      4.3.5   Conscription and Opportunity Cost
                      4.3.6   The Inefficiencies of Conscription
            4.4     Case Study: The Vietnam Transition from Conscription to an AVF
                      4.4.1   Background
                      4.4.2   The Typical Vietnam War Service Membe
                      4.4.3   Pressures to End the Draft
                      4.4.4   Summary
            4.5     U.S. Military Compensation: Is it Enough?
                      4.5.1   Military Pay
                      4.5.2   Military Benefits
            4.6     Private Military Companies/Forces (PMC/PMF)
                      4.6.1   The Growth of PMCs
                      4.6.2   PMCs and Efficiency Wages
                      4.6.3   Controversies Surrounding PMCs
            4.7     Key Points

Chapter 5:    Weapons Procurement
            5.1     Introduction
            5.2     Overview of the Arms Market
            5.3     The Domestic Weapons Market
                      5.3.1   Department of Defense as a Monopsony
                      5.3.2   Simplifying the Analysis
                      5.3.3   Bilateral Monopoly
                      5.3.4   The Contract Zone, Firm Diversification, and Higher Prices
                      5.3.5   Principal - Agent Model
                      5.3.6   Contract Type
                      5.3.7   Deadweight Loss and Externalities
            5.4     The Global Weapons Market
                      5.4.1   Growth of the Global Arms Market
                      5.4.2   Analyzing the Global Arms Market
            5.5     Case Study: The Joint Strike Fighter
                      5.5.1   The Project
                      5.5.2   The Bidding Process
                      5.5.3   The Final Bid
            5.6     Key Points

Chapter 6:    Civil Conflicts in the Developing World
            6.1     Introduction
            6.2     Economic Consequences of Civil Wars
                      6.2.1   Conflict Duration
                      6.2.2   Impact of Conflict on GDP and Government Services
                      6.2.3   Post-conflict Recovery
                      6.2.4   Spill-over Effects
            6.3     Economic Causes of Civil Wars
                      6.3.1   Poverty as a Cause
                      6.3.2   Natural Resources as a Cause
                      6.3.3   Greed as a Cause
                      6.3.4   Ethnic Dominance as a Cause
                      6.3.5   Inequality as a Cause
            6.4     Small Arms Transfers to the Developing World
                      6.4.1   The Supply of AK-47s
                      6.4.2   The Demand for AK-47s
                      6.4.3   Global Equilibrium and Implications
            6.5     Case Studies of Conflict and Underdevelopment in Africa
                      6.5.1   Sierra Leone
                      6.5.2   Sudan
                      6.5.3   Lessons from the Case Studies
            6.6     Peace Operations: An Economically Inefficient Response?
                      6.6.1   Expansion of Peacekeeping Operations
                      6.6.2   Peacekeeping as a Public Good
                      6.6.3   Marginal Costs/Marginal Benefit of Peacekeeping
            6.7     Key Points

Chapter 7:    Terrorism
            7.1     Introduction
            7.2     Definition of Terrorism
            7.3     Incidents and Trends in International Terrorism
                      7.3.1   Substitution Effect
                      7.3.2   Rise of Religious Radicalism
            7.4     Is Terrorism Rational?
                      7.4.1   Motivations to Join or Form a Terrorist Group
                      7.4.2   Modeling the Choice of Terrorism
                      7.4.3   Is Suicide Bombing Rational?
            7.5     Terrorist Financing
                      7.5.1   Multiple Sources
                      7.5.2   Multiple Transfer Methods
                      7.5.3   Case Study: The Hawala Network
            7.6     The Economic Impact of Terrorism
                      7.6.1   Macroeconomic Level
                      7.6.2   Microeconomic Level
                      7.6.3   International Trade
            7.7     Key Points

Chapter 8:    Weapons of Mass Destruction Proliferation
            8.1     Introduction
            8.2     Overview of Chemical, Biological, and Nuclear Weapons
                      8.2.1   Types of WMD
                      8.2.2   Why Focus on Nuclear Weapons?
            8.3     Basics of Producing Nuclear Weapons Material
                      8.3.1   Highly Enriched Uranium
                      8.3.2   Plutonium
            8.4     Demand for Nuclear Weapons
                      8.4.1   Security Dilemma Hypothesis
                      8.4.2   "More Bang for the Buck" Substitution Effect
            8.5     Supply of Nuclear Weapons
                      8.5.1   Nuclear Bartering
                      8.5.2   Bartering and Gains from Trade
                      8.5.3  Acquiring Revenues
            8.6     Treaties: An Effective Response?
                      8.6.1  Treaties in Theory
                      8.6.2  Treaties in Reality: The Nuclear Non-Proliferation Treaty
            8.7     Key Points

References

Index