Arms Sales and Foreign Aid: The German Case Austin Baker Abby Cooner Prof. Vreeland Krogh Honors Seminar

Research Question German Arms Imports German Foreign Aid Independent Variable Dependent Variable

Hypothesis If a country imports German arms, they are more likely to receive German foreign aid. How does this make sense?

Context End of Cold War  more open, competitive, less polarized arms market – COCOM – Wassenaar Arrangement – EU Policy ≠ decisions (Davis 2002: 6) “Much of what goes by the name of foreign aid today is in the nature of bribes”

The Process Foreign Country German Arms Manufacturers Federal Security Council Chancellor Federal Ministry Buys Arms Receives Aid BDSV Export Permits

Methodology Stockholm International Peace Research Institute (SIPRI) – Arms transfers database OECD Data ( ) Challenge of Endogeneity

Top German Arms Importers and Aid Recipients Top Ten German Arms Importers* (2006) South Africa Turkey Malaysia India15.00 China14.00 Pakistan12.00 Jordan4.00 Chile1.00 Iran1.00 Albania0.00 *Recognized ODA recipients in 2006, recorded in millions of TIV Top Ten German ODA Recipients* (2006) China Iraq Indonesia Serbia India Egypt Vietnam Turkey Tunisia79.05 Philippines69.32 *Recognized ODA recipients in 2006, millions of constant 2011 dollars

Table 2. Effect of German Arms Imports on Bilateral Aid received from Germany VariableModel 1Model 2Model 3 Value of German Arms Imports0.05**0.06***0.05** (2.39)(3.51)(2.55) Membership on the UNSC1.04*1.18** (1.91)(2.29) U.S. Military Assistance0.09**0.10* (2.37)(1.81) Political regime type0.02 (0.3) Human rights record0.3 (1.38) Pariah state-1.58 (0.96) War-0.52 (0.84) ln(GDP per capita, real)0.8 (0.38) Value of German goods imported by their trade partner0 (1.39) Value of a trade partner’s goods imported by Germany0 (1.6) Number of observations R-squared Notes: All regressions include country and year fixed-effects and regional quartics. Numbers in parentheses are the absolute values of t-statistics. We mark absolute t-statistics with * if p<0.10 (statistical significance at the 10% confidence level); with ** if p<0.05 (statistical significance at the 5% confidence level); and with *** if p<0.01 (statistical significance at the 1% confidence level). Notes: All regressions include country and year fixed-effects and regional quartics.

Conclusion Import arms  receive more aid Positive, statistically significant Causal logic reinforced by data