Spatial Econometric Analysis of the Arms Race between and among the Persian Gulf states

This paper aims to test the arms race between the Persian Gulf states using spatial econometric approach. For this purpose, a general model of military expenditure (Including economic, social and strategic variables) and statistical data of the 7 countries, include: Iran, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE has been used during 1995-2014. The estimated results indicate the existence of spatial dependence between and among the countries, therefore, the use of this type of estimate is justifiable. The results of the model estimation show that the coefficient of estimation of spatial interruption of the dependent variable is positive and significant; So that with an increase of 1% in the average military load of the Gulf states, the average military load of a country in this area is increased by 0.885% (nearly one percent). Based on these results it can be said that there was a type of strong arms race between and among the Persian Gulf countries during 1995-2014.