Purchasing Power: US Overseas Defense Spending and Military Statecraft

Abstract

The literature on economic statecraft has long focused on the effectiveness of foreign aid and trade as tools of inducement. However, existing scholarship largely neglects the role played by government procurement. By choosing to purchase goods or hire labor in foreign states, governments can provide economic benefits for strategic ends. The United States in particular leverages its defense procurement as a foreign policy tool. We introduce a new data set of US government procurement using information on all contracts executed overseas from 2000 to 2015. We develop a typology of how states use procurement to achieve foreign policy goals—power projection, counterinsurgency, and development—and provide descriptive statistics to explore variation in spending across countries and over time. We illustrate the power of the contract data by using it to code US military access in Africa, assess the relationship between spending and economic growth, and test whether economic inducements can buy influence.