Sanction Shocks, Economic Integration, and Military Spending

Do sanction shocks reduce target countries' military expenditure in relative terms? We argue that this is not the case because channeling proportionally more resources to the military can both signal target countries' resolve and capacity and consolidate their domestic political power. This effect, however, is moderated by target countries' economic integration into the global import networks of strategic commodities. Countries that are better integrated have smaller pressure to spend; less integrated countries, in contrast, have stronger incentives to purchase and stock weapons and strategic resources while they can. Applying dynamic panel modeling, we find strong support for our theoretical expectations.