The Role of Economic and Political Factors in the Arms Trade (An evidence for developing and developed countries)

Exports and imports include a wide variety of items. One of these items relates to military arms. Given the importance of arms trade in the defense and economic objectives of countries, it is important to examine the factors affecting in order to increase exports and bring imports to the desired level. Researchers believe that the arms trade is a function of economic and political factors. In this regard, in the present study, in format of arms imports and exports functions, the factors affecting them based on data in the period 1992-2015 have explored for 25 selected countries consisting of 19 developed and 6 developing countries including Iran. Fot this purpose, first, the variables affecting arms imports and exports are determined. Then, using econometric methods of combined data for each of the models, these functions are estimated and the role of each of the effective factors is evaluated. The estimation results of the arms imports model showed that the price of arms did not have a significant effect on arms import. Also, the effect of military spending on arms imports was significant for developing countries. Findings indicate a nonlinear relationship between production and arms imports, except for developing countries. Also, estimation of arms exports function showed that exports arms price had no significant effect on exports of these arms. In addition, the findings showed a direct effect of military spending and production on arms exports. Estimates of models for all groups showed that the 9/11 event increased arms trade worldwide significantly.