Burden sharing in the NATO alliance: An empirical test of alternative views

This paper undertakes an empirical test of two opposing views of interdependencies among members of military alliances. The first view, associated with Olson and Zeckhauser, argues that the public good aspect of defense induces free riding behavior by smaller alliance members, which imposes a disproportionate burden of supporting the alliance on the larger members. A second view argues that NATO defense activities produce a mix of outputs, some of which are not purely public, and some of which may be complementary across nations. Furthermore, the nature of the weapons systems and their relative use by alliance members may induce substantial cooperation by allies. The test proposed here analyzes the relationship between defense spending shares of NATO members and their population and relative wealth shares. A simple model is specified and tested using pooled time series cross sectional data. The empirical results indicate more support for the cooperative view of ally relationships than the Olson-Zeckhauser non-cooperative model.