Determinants of International Trade in Defence Sector

This research investigates interactions between defence-development-diplomacy (3D) within the framework of international trade determination in defence sector. As a consequence of historical evolution, the new 3D-paradigm of countries' foreign policy reflects in the states of 'Economic North'. Interdependent factors involved within are closely related to these 3D pillars, whereas the military trade in defence sector seems to be an interaction point of their influence. This study uses gravity model, being a conventional tool for trade studies, to explain the pattern of international trade in defence sectors of North-Atlantic countries. It provides a complex analysis of arms export and military import, using the estimations of different models specifications and theoretical evaluation of the relations between parameters employed in the research. It also elaborates the geopolitical and geoeconomic influences in terms of countries' policies mix determination. The introduced analysis grants empirical support for a correlation of particular parameters in the 3D-framework. On the other side, the intercausality in the net of links among 3D-factors found certain theoretical support.