Do Deployed US Troops foster Economic Growth?

While browsing newly posted articles at the Social Science Research Network, I came across this paper by Garett Jones and Tim Kane.  The abstract:

In the midst of a major U.S. military effort in Iraq and the Middle East, economists should be able to assess the relationship between U.S. troops and growth. The necessity of military force in providing security for nation-building is a common assumption among policymakers and international affairs experts, but there has never been an econometric analysis of the impact of troops on growth. We use a newly constructed disaggregated dataset on the deployment of U.S. troops over the years 1950-2000, and discover a positive relationship with host country economic growth, robust to multiple control variables.

The authors argue that the majority of the current growth literature suggest that economic growth is conditional upon good institutions, but the development of such institutions are fraught with political problems and poor mechanism design.   However, the presence of American troops provide three unique stimuli to the creation and maintenance of good institutions: security, the spread of technology, and economic stimulation by the influx of and spending by American soldiers.  While an intriguing micro-foundation for the development of credible institutions, the US Troop data alone should be interesting to play with beyond the 26 multivariate regressions they offer.

In a historical context, I am sure not all occupiers are equal and would be curious how generalizable this would be to French, Soviet, British, Japanese, and other countries that have had overseas troop deployments.  As the authors mention, the conditions of occupation will also have a significant effect on the terms of growth.  Consequently, a comparison between British and American hegemonic deployments may be apt to see if the American effect of deployment is unique. 

Comments

[David Choi]

I wonder what the effect of foreign troops is to the host country's national economy after security and legal institutions are stabilized. The conclusion said the spending of the troops didn't have any effect, so I guess the net effect is probably minimal, then.

Chalmers Johnson claimed that the miraculous high growth rates of occupied countries like Korea were because of policies that allowed the occupied country to export to the US without having to import anything... but then again, what does a scholar who cited Wikipedia for his books know?
... Also, my lack of math skills was a very crippling factor in reading this paper.

[Michael A. Allen]

Does he really use Wikipedia as an official source? Which book (just in case I assign it and have to forewarn students about or make it into a lesson of finding superior citations)?

Your side comment might have been tongue in cheek about ignoring his argument, but to double check, Johnson has some interesting hypotheses about the role the overseas bases play in other countries and I wouldn't dismiss it for something that not everyone views as an academic mistake (most of his books are intended for popular consumption these days). This externally enforced protectionism is an interesting argument though, I may have to visit this section of the book for my own work.

[David Choi]

I think it might have been Blowback (if not one of the other books of the trilogy). The footnotes cited Wikipedia on one of the incidents in which American service men raped a Japanese girl (there were at least 2 incidents and I don't remember which one).

It was a tongue in cheek argument, because the citation was just referring to a generally accepted account of the incident, so I don't think the citation seriously calls into his question his scholarship, but I was nonetheless surprised to see Wikipedia as a cited source.

[vimothy]

Great find!