Using military spending data: The complexity of simple inference

This study assesses the reliability of estimates of the direction of milita ry spending growth obtained from two main sources - the US Arms Control and Disarmament Agency (ACDA) and Stockholm International Peace Research Insti tute (SIPRI). It examines the average directional agreement between early a nd late ACDA and SIPRI spending estimates for a full sample of countries an d for seven different regions (Africa, East Asia, Latin America, Middle Eas t, South Asia, NATO Europe, and the Warsaw Pact). It shows that the directi on of ACDA and SIPRI estimates diverge significantly over time and that the two data sources appear especially challenged when estimating the sign of smaller, and especially negative, growth-rate changes and of spending in re gions (Africa and the Middle East) where growth-rates vary markedly. It fur ther establishes that, when a single source publishes consistent directiona l estimates, these estimates can diverge considerably from those published by the other source. Based on the findings, this study proposes a set of si mple validation procedures and tests their strengths and weaknesses on vari ous sew of countries.