Corruption and Military Expenditure: At 'No Cost to the King'

We analyse the determinants of the number of military personnel, military expenditure and arms imports using a panel data of all available countries with data from 1984-2006. The number of military personnel increases with the extent of external threat and with conscription. There is evidence for both economies of scale and the existence of 'ghost soldiers'. Expenditure, given the number of military personnel, increases with the extent of internal threat and the area of the country. Arms imports increase with the extent of external threat, GDP per capita and corruption. Finally, both arms imports and military expenditure impact upon corruption.