TECHNOLOGICAL-PROGRESS, ALLIANCE SPILLOVERS AND ECONOMIC-GROWTH IN A DISAGGREGATED ARMS-RACE MODEL

The paper develops a model of the intertemporal allocation of consumpt ion where the role of national security is in protecting the wealth of a country from an attack by an adversary. The model disaggregates wea pon systems into those which reduce the likelihood of an attack and th ose which reduce the damage from an attack. Examples of the former typ e of weapons include bombers and ICBM's and of the latter, anti-tactic al missiles like the Patriot or an antiballistic missile system such a s SDI. It is shown that technological innovation in offensive weapon s ystems lead to increases in the deployment of these systems but to dec reases in the deployment of defensive systems. Whereas the effects of technological innovations in damage-limiting or defensive systems are ambiguous. Alliance behaviour is analyzed within this framework and it is shown that free riding is reduced or eliminated by the introductio n of multiple weapon systems.