Demand for Military Expenditures and Security Alignment Choices in the Indo-Pacific

We explore the possibilities and limitations of models of the demand for military expenditures, as against additional kinds of cross-country analyses, with an empirical focus on the Indo-Pacific region. Our research bridges a gap between the Defence Economics and International Relations literatures by developing testable security alignment hypotheses and by testing these hypotheses in three ways: with demand modelling on total expenditures, with analyses on estimated stocks of imported armaments, and with qualitative analyses of trends in defence cooperation between states. We find consistent evidence across research methods of an increase in threat perceptions towards China since around 2012 and of balancing behaviour by US allies and by two non-allies. As compared to standard demand modelling, our hypothesis-based mixed methods approach allows for a clearer treatment of samples with mixed and shifting security alignments and of states that stabilise or reduce expenditures in the face of rising threat perceptions.