Defense Budget and Factors Affecting It: A Detailed Examination

This assignment delves into the intricacies of defense budgets, examining the factors that influence their allocation and size. It begins by addressing the nature of national defense as a public good, highlighting its non-excludable and non-rivalrous characteristics, and discussing the challenges of privatization. The assignment then explores both internal and external factors that impact defense spending, including economic indicators like GDP, political climates, infrastructure, and international relations. It emphasizes the importance of considering threats, political influences, and technological advancements. The analysis further examines the problems and challenges countries like Canada face in managing defense infrastructure, including logistical requirements and resource allocation inefficiencies. Finally, the assignment uses a hypothetical scenario to illustrate the impact of factors like weapon prices, GDP changes, and international relations on defense capabilities and national welfare.

Running head: DEFENSE BUDGET AND FACTORS AFFECTING IT
Defense Budget and Factors Affecting It
Name of the Student:
Name of the University:
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1DEFENSE BUDGET AND FACTORS AFFECTING IT
Question a
National defense inevitably forms an example f a public good as it has the two important
characteristics that it is a non-excludable and a non-rival good. If National defense is privatized
then it will mean that only those who pay for the good will receive the benefits. However, this
exclusion is not possible because obviously in cases of national rivalry of one country with the
other, each citizen of the country will be protected whether he pays for it or not (Murphy, 2017).
Further, the maintenance and operational costs associated with the national defense are too high
for a private firm to bear and will eventually lead to corrupt practices. Further National Defense
is an aspect f any country that is dependent on a lot of social and economic and political issues
and so cannot be privatized.
Question b
There are various internal and external factors that are to be catered to while deciding
upon the total amount that is to be used in the context of military and defense expenditure. The
internal factors involve the ongoing policies and regulations in place and also the economic
factors like total Gross Domestic Product generated by the country (Keddell, 2016). The other
internal factors include availability of raw materials and infrastructure available for the country
and also the consumption patterns lying within the country. The amount of political and other
types of conflicts ongoing within the different regions of a country also form a very important
internal factor. The external factors for the defense budget determination come into question
when the country does not have enough resources or infrastructure to promote the manufacturing
of defense equipment and goods within the country and needs to trade with other countries for
the availability of the same. In this kind of a scenario, the amount of exchange rated also

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becomes very important as an external factor determining and influencing the amount of defense
expenditure. In the case of external factors that influence the defense budget the context of the
exposure of countries to threat from other countries and the kind of relation that it maintains with
other countries also becomes very important.
The researcher should essentially first bifurcate the entire list of factors influencing the
defense budget of any country into internal and external factors (Marcau, 2016). After this he
should find out which factors influence the military actions and research the most and the impact
of all the ongoing political and economic factors on the country as a whole. Each factor or
variable’s impact on the national expenditure should be tested and the ones that impact the
system the system in a major way should be addressed.
As mentioned earlier, the entire defense budget and expenditures depend on a number of
factors in the economic, social and political fields which vary from one country to another
(DeGrasse, 2016). The budget also depends and varies according to the differences in the
instruments used and the allocation of resources as a whole and also on how arbitrary the defense
politics is which is associated with that particular country. Past papers suggest that the influence
of political factors in fact forms a very important variable in determining the total amount of
military budget that should be kept allocated. Another very important consideration is the
amount and extent of exposure to threats that a country essentially faces.
Question c
There are many problems and challenges that Canada and many other countries face in
maintaining and monitoring operational and infrastructural requirements of defense and military

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infrastructure. One of the biggest problems faced by the country is the complex set of political
rules and regulations existing in the country (Leuprecht & Sokolsky, 2015). There are a lot of
logistical requirements to cater to the operational defense needs which the country lacks. The
country is also unable to figure and find out the list of opportunities that Canada has in terms of
human skills related to the defense and military section of the country. There also exists a
mismatch in the needs of the government and the needs and demands of the military base causing
the country to not be efficiently able to handle the set of defense requirements. In other words,
inefficiency in the allocation of resources for the military, insufficient management of the
procurement process and also insufficient budget allocation has led to the country’s armed forces
having a lack of capabilities related to proper operational defense infrastructure and
management.
Question d

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5DEFENSE BUDGET AND FACTORS AFFECTING IT
c) M1= 100, M2=
200, W1=100,
W2=173

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The values of M1, M2, W1 and W2 suggest that the more the amount of defense infrastructure
and operational capabilities of the firm, the greater is the amount of welfare associated with the
firm. This is why country 2 has higher welfare than country 1.
d)
i) If the price of weapons increases in either of countries, the affordability of the weapons
reduce and so the amount of protection can be expected to reduce. The countries in this case will
be worse off as either the expenditure on the weapons will increase resulting in a decrease in the
expenditure of other resources or the amount of protection will decrease.
ii) If the GDP of country 1 increases from 1 to 400 then M1 will increase causing an
opportunity for the country to spend more on the defense budget and hence be more protected or
even take actions that can have adverse effects on country 2. This will cause country 1 to be
better off and country 2 to be worsened causing it to be exposed to more threats from country 1.
iii) If the value of β increases to 0.6, then the intensity or probability for the two countries
attacking each other increases and this will of course worsen the defense situation for both the
countries. This is so because the countries now have more technological innovation to get
involved in a war and thus harm each other in an easier manner.

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References
DeGrasse, R. W. (2016). Military Expansion, Economic Decline: Impact of Military Spending
on United States Economic Performance. Routledge.
Keddell, J. P. (2016). The Politics of Japanese Defense: Managing Internal and External
Pressures: Managing Internal and External Pressures. Routledge.
Leuprecht, C., & Sokolsky, J. J. (2015). Defense Policy “Walmart Style” Canadian Lessons in
“not-so-grand” Grand Strategy. Armed Forces & Society, 41(3), 541-562.
Marcau, F. C. (2016). Security as a determining factor of quality of life in a state from an
insecure regional area. Analele Universitatii" Constantin Brancusi" din Targu Jiu. Serie
Litere si Stiinte Sociale, (4), 77.
Murphy, R. S. (2017). Property rights in personal information: An economic defense of privacy.
In Privacy (pp. 43-79). Routledge.