Three Essays on the Demand for Military Expenditures and Terrorist Group Survival

This dissertation contains three chapters. The first two chapters study the demand for military expenditure in the Asia-Pacific region, and the third chapter studies terrorist group survival. Applying a spatial panel approach and using five different ways to measure connectivities among sample countries, the first chapter estimates the demand for defense in the Asia-Pacific region. Seemingly unrelated regressions are used for a group of selected sample countries to explore their demand for military expenditure. Results show that Asia-Pacific countries do respond to the defense spending of other countries, and that free-riding is prevalent in the region. Sample countries respond negatively to Chinese and US military expenditure. Countries’ income level and population are other determinants of military expenditure. Heterogeneity exists among countries. The second chapter estimates the determinants of military expenditure in Asia and Oceania using a dynamic panel approach. Even though the methodology is different from the first chapter, similar conclusions are drawn. Countries are free-riding on the US military expenditure and they do not respond to Chinese military expenditure. A period lag in military expenditure, countries’ income level, population, and trade openness are important determinants of military expenditure, while the number of ongoing wars and regime types are not. The third chapter introduced an extended data set of 760 terrorist groups that engaged in attacks during 1970-2016. Since the major source of an earlier well-cited data set on terrorist groups stopped updating in 2007, this chapter contributes to the literature by updating terrorist group data and adding new variables into the data set. The features of this data set are displayed by a series of tables and figures that reveals the distribution of terrorist groups across multiple dimensions. The importance of the new data set is highlighted with a standard survival analysis applied to terrorist groups.