Examination of Affecting Factors on Military Expenditure in MENA Region Countries with an Emphasis on Natural Resources: Bayesian Model Averaging Approach (BMA)

This article examines the robust determinants of military expenditure in the MENA region countries (including Iran) with an emphasis on natural resources during the years of 1995-2014. For this purpose, 22 variables in three categories are used: 1.Economic and social variables 2.Political, strategic and military variables 3.Natural resources. Bayesian Model Averaging approach (BMA) is used, due to convenience feature to consider the uncertainty assumption of model. With estimation of 100000 regressions and Bayesian averaging of coefficients, robust determinants of military expenditure in the MENA region countries are specified. Based on the results, the share of natural resources revenues from GDP and the share of fuel exports from commodity exports have an important effect on military expenditure with positive signs. Among the natural resources, the share of oil revenues from GDP has a positive and robust effect on the military expenditure with a probability about 0.99. According to the others results, among the political, strategic and military variables, the variables of terrorist incidents, warfare score and the average military expenditures of the MENA region countries, respectively, have important influence on military expenditure. Also, none of the economic and social variables have significance and probability level requirement to influence on military expenditure. Accordingly, it can be said that strategic factors (war and security threats) and rents of natural resources (especially oil) are the factors determining the military expenditure in the MENA region countries.