Free Riding Reconsidered: The Influence of Space and Time on NATO Member States’ Defence Spending

• In Event: Poster Session: International Security 2

Abstract

Concerns over burden sharing and free riding are common in alliances, including in the context of NATO. One common way to approach free riding is to analyze ally interdependence in spatial terms. How does a given country’s defense spending react to changes in its allies’ military expenditures? Recent literature (e.g., George and Sandler 2018) finds such a significant negative effect for NATO allies and concludes that the alliance is systematically prone to free riding on behalf of its members. However, this research remains silent on the empirical magnitude of free riding. Furthermore, it does not adequately account for temporal dependence, which risks biased estimates of the spatial parameter and inaccurate effects of covariate estimates as well. Using latest methodological findings (Cook, Hayes, Franzese, 2021), we employ the spatiotemporal autoregressive distributed lag (STADL) model. When temporal dependence is better accounted for, we conclude that the previously found (short-run) free-riding effect was inflated. In the long term, however, it is more significant than the available scholarly evidence suggests. We discuss the practical and theoretical implications of this and lay out further steps that need to be made to improve the efforts of modeling defense spending interdependence.

Authors

• Vytautas Kuokstis, Vilnius University

• Ringailė Kuokštytė, Vilnius University