Is There an Arms Race Between Pakistan and India? An Application of GMM

Abstract

This study employs the Richardson model to investigate the presence of an arms race between Pakistan and India during the period 1972–2010. Using the generalized method of moments approach, we find that the grievance term for the Pakistan model is positive while that for India is negative. Both countries’ defense spending in the previous period is negatively related to the change in their own defense spending due to the economic or administrative incidence of an arms race. Moreover, the defense or reaction coefficients in the specified model determine the presence of an arms race between the two countries. The signs of these coefficients are positive in accord with the classical Richardson model, suggesting that an arms race does indeed exist between Pakistan and India.