Working Paper 04-3
This paper was written as a key contribution to a research project that resulted in the June 2004 report Guns or Growth?: Assessing the impact of arms sales on sustainable development. The report was published by Control Arms, a joint campaign of Oxfam, Amnesty International and the International Network on Small Arms (IANSA), in association with project partners Saferworld and Project Ploughshares.
The proposed Arms Trade Treaty addresses the impact of arms transfers on development. Under Article 4c of the ATT, state signatories are required to take into account whether the proposed arms transfer is likely to have an adverse effect on sustainable development; the Article specifies that in such circumstances there is to be a presumption against authorization. Similar language is included in the OSCE Principles Governing Conventional Arms Transfers, the Wassenaar Arrangement’s Best Practice Guidelines, and other national, regional and international arms control instruments.
This literature review surveys over 80 sources and studies that consider the development implications of arms transfers in developing countries. It identifies gaps in existing research.
It also identifies a number of indicators that can be used to assess the impact of arms transfers on sustainable development and to guide the export decisions of potential parties to the Arms Trade Treaty. The main findings of this paper are summarized below.
Section One: The Impact of Military Expenditure on Development
- The literature pertaining to the opportunity costs of military spending provides the most conclusive evidence of the potentially negative relationship between military spending and sustainable development. A number of scholars, international organizations and civil society groups argue that, if public resources are fixed, military spending occurs at the expense of state-driven initiatives to improve public welfare. Moreover, the peace dividend literature suggests that decreases in military spending will release resources for other, more productive purposes. However, others argue that the link between military spending and social expenditures is not a direct one. The opportunity costs of military spending will be influenced by a country’s defence spending decision-making process. Recent studies, government statements and the World Bank’s Poverty Reduction Strategy Papers (PRSP) initiative indicate that transparent, accountable and participatory defence spending decision-making processes are more likely to produce appropriate spending policies. A government’s allocation of resources also depends on regime type; highly
militarized governments are more likely to prioritize military spending over development spending.
- The literature on the effects of military spending on social development reveals a great deal of ambiguity. Some scholars argue that military spending inhibits democratic and human resource development. Other research indicates that the military provides the security and stability and the foundations of modernization that are the preconditions of social development. A review of the literature also indicates a need to conduct further research focusing specifically on determining causal relationships between military expenditure and a number of development indicators (as opposed to measurements of economic well-being).
- There is also a lack of consensus in the literature on the impact of military spending on economic growth. Some arguments indicate that military spending helps bring an economy to full employment, to mobilize unused resources and to increase demand for output. Research underscoring the negative impact of military spending on economic growth notes that military spending may contribute to a country’s debt burden and that investment in the military may occur at the expense of investment in the civilian industrial sector.
Section Two: The Impact of Arms Transfers on Development
- Few studies disaggregate military spending to account for the specific impact of arms transfers on development. This may be due to the difficulty of identifying measurements of development and to a lack of information on governments’ budgetary allocation for arms.
- Among research that does address the developmental implications of arms transfers, there is evidence to suggest that arms transfers to developing countries can have an adverse effect on development, although there is by no means consensus among
researchers. Results are often inconsistent. A number of scholars argue that arms provide the military with the capacity to maintain internal stability and create a climate conducive to development. Other research indicates that arms transfers are
likely to have a negative impact on democratization and human security in developing countries.
- A review of the literature pertaining to the impact of arms transfers on economic growth reveals a tension between research indicating that the purchase of sophisticated equipment can lead to higher levels of education, training and productivity among the workforce, on the one hand, and studies underscoring the negative impact arms spending can have on human resources and a country’s debt burden, on the other.
Section Three: Offsets, Technology Transfers and Arms Production – Assessing the Impact on Development
- A review of the literature pertaining to trade and technical arrangements yields ambiguous results. Some analyses that focus on the impact of such arrangements on recipient countries suggest that offset agreements can benefit countries, for example
by disposing of exports, improving a country’s trading position, and helping to build an indigenous arms production capacity. Other studies indicate that offsets may serve to restrict economic growth and development by facilitating inefficient and uncompetitive trade. In addition, several scholars argue that technology transfers do not contribute to defence or civilian industrialization. A number of scholars submit that a domestic arms industry can contribute to job creation, reduce the strain on the defence budget and facilitate non-defence related industrialization. Others argue that there is little evidence to suggest that arms exports have a positive, long-term, net effect on economic growth and development. An indigenous arms industry may
actually consume resources that could otherwise be allocated to more productive sectors of the economy. The effects of arms exports on growth and development may best be determined on a case-by-case basis.
Section Four: The Development Impact of the Use, Availability and Proliferation of Arms
- A review of the example of small arms/light weapons reveals that once weapons are transferred, they can exert a persistent negative impact on development.