Guns for butter: Trade effects of arms transfers

Abstract

Abstract Using a global dyadic panel from 1950 to 2021, we find a positive association between arms transfers from an exporter to an importer and general goods exports to that partner. The effects are short‐run: export responses peak around the transfer and fade within a few years. The arms‐trade linkage is smaller among highly institutionalized, high‐income partnerships and larger where security and commerce are more tightly bundled, especially in dyads linked by overseas military presence. Consistent with a political‐alignment channel, arms transfers are followed by lower United Nations voting disagreement. The associated trade increase does not reflect a symmetric improvement in relations.