Energy (In)Security and the Arms Trade
CSEF working paper no. 452
37 Pages Posted: 21 Oct 2016
Date Written: September 2016
We provide novel empirical models of the arms trade and focus on the role of energy dependence, in particular of oil, in explaining the trade of weapons between countries. Dramatic geopolitical events such as wars can cause significant disruptions in the supply of oil and increase oil prices. Oil-dependent economies have therefore incentives to provide security by selling or giving away arms to oil-rich countries and reduce the risk of instability. We find strong empirical support for this claim using data on international transfers of major weapons and information on global and local oil dependence, oil reserves and oil discoveries.
Keywords: Arms Trade, Oil, Security
JEL Classification: F10, F50, H56, Q34
Suggested Citation: Suggested Citation