The Asymmetric Impact of Global Geopolitical Risk on Defense Spending in Iran in the Form of VECM Model

Document Type : Original Article

Authors

1 Ph.D. of Public Sector Economics, School of Economics and Administrative Sciences, Lorestan University, Khoram Abad, Iran

2 Assistants Professor, Department of Economics, Payame Noor University, Tehran, Iran

Abstract

Global geopolitical risk indicates geopolitical tensions and events that are a serious threat to global security and peace. Most countries in the world react to this issue by increasing defense spending. The importance of this issue for the countries of the Middle East region is twofold; Because this region plays an important role in global geopolitical risk. Based on this, in the current research, the short-term and long-term asymmetric effects of global geopolitical risk on Iran's defense spending have been investigated using a neoclassical model and annual data for the period of 1985-2021. For this purpose, first, the positive and negative impulses of global geopolitical risk have been extracted with the help of Granger and Yoon method. Then, using the Johansen-Juselius cointegration test, the existence of an asymmetric long-term equilibrium relationship has been confirmed; Finally, the Vector Error Correction Model (VECM) has been used to measure these asymmetric effects. The findings of this research show that in the short and long term, the positive impulses of the global geopolitical risk have increased defense spending and its negative impulses have decreased defense spending. But the increasing effect of positive global geopolitical risk impulses is greater than the decreasing effect of its negative impulses (confirming the asymmetric effect). According to other research results, Israel's defense spending has been the most important factor in increasing Iran's defense spending in the long term, and Saudi Arabia's defense spending has been the most important factor in increasing Iran's defense spending in the short term.

Keywords

References

الف) منابع فارسی
ارباب شیرانی، بهروز و عباسی، محمدحسن (1388)، «تجزیه‌وتحلیل سرمایه‌ فکری دانشگاه‌ها از دیدگاه مدیریت دانایی»، مجموعه مقالات نخستین کنفرانس بین‌المللی «سرمایه فکری ایران»، تهران.، صص 150-121
باغستانی میبدی، مسعود؛ عباسی دره‌بیدی، ابوالفضل و بوجار، حمیدرضا (1397)، برآورد مدل رقابت تسلیحاتی بین کشورهای منتخب منطقه غرب‌آسیا با تأکید بر جمهوری اسلامی ایران، مطالعات مدیریت راهبردی دفاع ملی، 2(7)، صص 43-79.
دشتبانی، یاور و ابراهیمی، مهرداد (1398)، شناسایی و رتبه‌بندی عوامل مؤثر بر بودجه دفاعی: رویکرد اقتصاد سیاسی دفاع، اقتصاد دفاع، 4(11)، صص 9-41.
دفارژ، فیلیپ مورو (1392)، فرهنگ ژئوپلیتیک، سید حامد رضیئی، انتشارات فرهنگ معاصر، ص 7.
گل‌خندان، ابوالقاسم (1396)، تحلیل اقتصادسنجی فضایی از رقابت تسلیحاتی در کشورهای حوزه‌ی خلیج فارس، علوم و فنون نظامی، 13(39)، صص 5-27.
گل‌خندان، ابوالقاسم (1398)، گزیده‌ای از موضوعات در علم اقتصاد دفاع (تقرب تجربی): رقابت تسلیحاتی و عوامل تعیین‌کننده مخارج دفاعی به‌همراه سنجش آن در کشورهای خاورمیانه، تهران: انتشارات نارون دانش.
گل‌خندان، ابوالقاسم و صحرائی، سمیه (1396). پیش‌بینی تجربی وضعیت رقابت تسلیحاتی بین ایران و عربستان در افق 2040، آینده‌پژوهی دفاعی، 2(7)، صص 77-102.
گل‌خندان، ابوالقاسم و علیزاده، محمد (1397)، برآورد تقاضای غیرخطی بار دفاعی و کشش درآمدی آن در ایران با توجه به سطح تهدیدات بین‌المللی، تحلیل‌های اقتصادی توسعه ایران، 6(1)، صص 147-177.
محمدیان‌منصور، صاحبه و گل‌خندان، ابوالقاسم (1399)، شناسایی عوامل اصلی تعیین‌کننده بودجه دفاعی در ایران به کمک رهیافت بیزی، سیاست‌های مالی واقتصادی، 8(۳۲)، صص ۱۸۹-۱۶۱.
مرادخانی، نرگس؛ دین‌محمدی، مصطفی و تائبی، محمد (1398)، عوامل تعیین‌کننده مخارج دفاعی در ایران. تحلیل‌های اقتصادی توسعه ایران، 7(1)، صص 283-298.
نوفرستی، محمد (1389)، ریشه واحد و همجمعی در اقتصاد سنجی، انتشارات رسا.
ب) منابع انگلیسی
Abdlaziz, R., Naseem, N., Slesman, L., & Ahmed, Y. (2021). The Impact of Oil Price Shocks on the Military Expenditure of Selected MENA Oil Exporting Countries: Symmetric and Asymmetric Cointegration Analysis. Iranian Economic Review, 25(2), 219-235. doi: 10.22059/ier.2021.83447
Abdelfattah, Y.M., Abu-Qarn, A. & Dunne, P. (2013). the Demand for Military Spending in Egypt, Defense and Peace Economics, 25(3), 231-245. https://doi.org/10.1080/10242694.2013.763454
Aizenman, J. & Glick, R. (2006). Military Expenditure, Threats, and Growth. Journal of International Trade & Economic Development, 15(2), 129-155. doi:10.1080/09638190600689095
Bakirtas, T. & Akpolat, A. G. (2020). The Relationship between Crude Oil Exports, Crude Oil Prices and Military Expenditures in some OPEC Countries. Resources Policy, 67. https://doi.org/10.1016/j.resourpol.2020.101659
Battaglino, M. J. (2013). The Determinants of Arms Spending in South America. Journal of Politics in Latin America, 5(2), 71-103. doi:10.1177/1866802X1300500203.
Beckley, M. (2010). Economic Development and Military Effectiveness. The Journal of Strategic Studies, 33(1), 43-79. doi:10.1080/01402391003603581
Bloom, N. (2009). The Impact of Uncertainty Shocks. Econometrica, 77 (3), 623–685.
Caldara, D. & Iacoviello, M. (2018). Measuring Geopolitical Risk. FRB International Finance Discussion Paper (1222), 1-66. https://doi.org/10.3982/ECTA6248
Carter, B. & Fay, E. (2019). Responding to Terror: An Empirical Analysis of U.S. Military Activity, Public Opinion, and Transnational Terrorism. Journal of Applied Security Research, 14(2), 140-168. doi:10.1080/19361610.2019.1581875
Chen, S.& Feffer, J. (2009). China’s Military Spending: Soft Rise or Hard Threat? Asian Perspective, 33(4), 47-67. doi:10.1353/apr.2009.0002
Cheng, C.H.J. & Chiu, C.W.J. (2018). How Important are Global Geopolitical Risks to Emerging Countries? International Economics, 156, 305-325. https://doi.org/10.1016/j.inteco.2018.05.002
Clements, B., Gupta., S. & Khamidova, S. (2019). Is Military Spending Converging across Countries? An Examination of Trends and Key Determinants. IMF working, WP/19/196.
Cunado, J., Gupta, R., Lau, C.K.M. & Sheng, X. (2019). Time-Varying Impact of Geopolitical Risks on Oil Prices. Defence and Peace Economics, 31(6), 692–706. https://doi.org/10.1080/10242694.2018.1563854
Enders, W. (1995). Applied Econometric Time Series, John Wiley Sons, Ince. USA, p.433.
Fonfría, A. & Marín, R. (2012). Determinants of the Demand for Defence Expenditure in the NATO Countries. Journal of the Higher School of National Defense Studies, 9-30.
Granger, C.W. & Yoon, G. (2002). Hidden Co-integration. University of California, Working Paper.
Johanson, S. & K. Juselius (1990). Maximum Likelihood Estimation and Inference on Co-Integration-Whit Applications to the Demand for Money. Oxford Bulletin of Economics and Statistic, 52, 169-210.
Josselin, M. & Malizard, M. (2022). Determinants of Defense Spending: The Role of Strategic Factors in France, Defence and Peace Economics, 33, 938-955. https://doi.org/10.1080/10242694.2021.1907985
Khan, K., Su, C. W. & Rizvi, K.A. (2020). Guns and Blood: A Review of Geopolitical Risk and Defence Expenditures. Defence and Peace Economics, 33(1), 42-58. doi:10.1080/10242694.2020.1802836
Kollias, C., Paleologou, S. M., Tzeremes. P. & Tzeremes, N. (2018). The Demand for Military Spending in Latin American Countries. Latin American Economic Review, 27(1), 11-27. doi:10.1186/s40503-018-0059-8
Monge, M., Gil-Alana, L. A. & Gracia, F. P. (2017). U.S. Shale Oil Production and WTI Prices Behaviors. Energy, 141, 12-19. https://doi.org/10.1016/j.energy.2017.09.055
Moretti, E., Steinwender, C. & Van Reenen, J. (2014). The Intellectual Spoils of War? Defence R&D, Productivity and Spillovers. Presented at the 2016 American Economic Association Annual Meeting. NBER, Working Paper, 1050 Massachusetts Avenue, Cambridge.
Murdoch, J.C. & Sandler, T. (2002). Economic Growth, Civil Wars, and Spatial Spillovers, Journal of Conflict Resolution, 46, 91-110.
Neubauer, J. & Odehnal, J. (2018). Security and Economic Determinants of the Demand for Czech Military Expenditure: ARDL Approach. In AIP Conference Proceedings. Melville: AIP Publishing, 1-4. 1978(1).
Noguera-Santaella, J. (2016). Geopolitics and the Oil Price. Economic Modelling, 52, 301-309. https://doi.org/10.1016/j.econmod.2015.08.018
Nordhaus, W. D., Oneal, J. R. & Russett, B. (2009). The Effects of the Security Environment on Military Expenditures: Pooled Analyses of 165 Countries, 1950-2000. Cowles Foundation Discussion Paper, No. 1707.
Nordhaus, W. D., Oneal, J. R. & Russett, B. (2012). The Effects of the International Security Environment on National Military Expenditures: A Multicounty Study. International Organization, 66(3), 491-513. doi:10.1017/S0020818312000173
Olanipekun, I. O. & Alola, A. A. (2020). Crude Oil Production in the Persian Gulf Amidst Geopolitical Risk, Cost of Damage and Resources Rents: Is there Asymmetric Inference? Resources Policy, 67. https://doi.org/10.1016/j.resourpol.2020.101659
Overland, I. (2015). Future Petroleum Geopolitics: Consequences of Climate Policy and Unconventional Oil and Gas. Handbook of Clean Energy Systems. John Wiley & Sons.
Paraschos, P.E. (2017). Geopolitical Risk in the Middle East & North Africa: Shatter Belts & Great Power Rivalry, Cover Story. Rising Geopolitical Risk.
Rosh, R. M. (1988). Third World Militarization: Security Webs and the States they Ensnare. Journal of Conflict Resolution, 32(4), 671–698.
Sandler, T. & George, J. (2016). Military Expenditure Trends for 1960–2014 and What They Reveal. Global Policy, 7(2), 174-184. doi:10.1111/1758-5899.12328
Smith, R. P. (1989). Models of Military Expenditure. Journal of Applied Econometrics, 4(4), 345-359. doi:10.1002/jae.3950040404
Yalta, A. T. & Yalta, A. Y. (2021). The Determinants of Defense Spending in the Gulf Region: Evidence from Seemingly Unrelated Regressions. Working Papers 1455, Economic Research Forum, revised 20 Jan 2021.
Xiaoxin, Y. & Bo, C. (2021). Defense Burden and the Effect of Others: From Neighbors to Allies. Defence and Peace Economics, 32(8), 927-940. https://doi.org/10.1080/10242694.2020.1789334
Defense Policy
Volume 33, Issue 127 - Serial Number 2
Summer 2024
August 2024
Pages 152-121

Files

History

  • Receive Date: 18 January 2023
  • Revise Date: 05 February 2023
  • Accept Date: 02 October 2024

Share

How to cite

Statistics