Grasping the Peace Dividend: Some Propositions on the Conversion of Swords into Plowshares

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Abstract
This review discusses the likely size, pace, and distribution of reductions in defense spending and the possible barriers to converting military resources to civilian purposes. It argues that the prospects for a peace dividend in the aftermath of the Cold War are clouded by political incentives and economic interests that may oppose or retard significant military retrenchment. Moreover, the resource savings from any military retrenchment may not necessarily be reallocated fully and efficiently to produce gains in civilian production and productivity. Any such gains are apt to take some time to materialize, whereas the political costs and socioeconomic disruption caused by lower military expenditures are likely to be felt more immediately. The impacts of a defense cutback, both positive and negative, will be uneven across industries, occupations, regions, and ethnic and income groups, so that some will bear more of the adjustment costs while others will reap more of the ensuing benefits. Indeed, given their different social institutions, political cultures, and economic structures, different countries are likely to pursue alternative policy offsets that accompany any defense cutback, thus resulting in an uneven distribution of the peace dividend globally.

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