Global Arms Trade and Oil Dependence

The Journal of Law, Economics, and Organization, Volume 34, Issue 2, 1 May 2018, Pages 272–299, DOI/10.1093/jleo/ewy007

CSEF WORKING PAPER NO. 452

42 Pages Posted: 15 Apr 2019

See all articles by Vincenzo Bove

Vincenzo Bove

University of Warwick - Department of Politics and International Studies

Claudio Deiana

University of Cagliari - Department of Economics; University of Essex - Department of Economics; Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Roberto Nisticò

Center for Studies in Economics and Finance; Department of Economics and Statistics (DiSES), University of Naples Federico II; IZA Institute of Labor Economics

Date Written: March 19, 2018

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: Arms Trade, Oil Dependence, Gravity Model

JEL Classification: F10, F50, H56, Q34

Suggested Citation

Bove, Vincenzo and Deiana, Claudio and Nisticò, Roberto, Global Arms Trade and Oil Dependence (March 19, 2018). The Journal of Law, Economics, and Organization, Volume 34, Issue 2, 1 May 2018, Pages 272–299, DOI/10.1093/jleo/ewy007, CSEF WORKING PAPER NO. 452, Available at SSRN: https://ssrn.com/abstract=3352915

Vincenzo Bove

University of Warwick - Department of Politics and International Studies ( email )

Coventry CV4 7AL
United Kingdom

Claudio Deiana

University of Cagliari - Department of Economics ( email )

Cagliari, 09124
Italy

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
ITALY

Roberto Nisticò (Contact Author)

Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

HOME PAGE: http://www.csef.it/

Department of Economics and Statistics (DiSES), University of Naples Federico II ( email )

Via Cintia 26
Naples, Napoli
Italy

HOME PAGE: http://www.dises.unina.it/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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