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Abstract

What is the relationship between the level of economic interdependence among states and the geography of defense spending? I argue that as the level of economic interdependence in a region increases, the geographic structure of defense spending weakens. States in a highly interdependent system will have defense expenditures that correlate weakly to the defense expenditures of nearby states. Conversely, in a less interdependent system, states with high defense expenditure are more likely to be located near other states with high defense expenditure. The argument is evaluated by constructing spatial models of defense spending in Europe in the period of 1995-2019. The models will produce the Moran’s I statistic, which measures the geographic structure of defense spending, and a count of threat responsive countries, defined as states with high defense expenditure in proximity to other states with high defense expenditure. Foreign direct investment flows is used to operationalize the economic interdependence variable. The resulting linear regressions shows a significant inverse relationship between the level of foreign direct investment and the number of threat responsive countries.

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