Is There an ARMS Race between South and NORTH KOREA?

Abstract

Because South and North Korea have kept the military confrontation since the Korean War seriously, it has been strongly believed that an arms race should exist between these two countries. However, because of the lack of data on North Korea has constrained empirical studies, until now, few studies have consequently dealt with the arms race between South-North Korea. An empirical analysis of the arms race between the two Koreas has significant policy implications for the security of the Korean Peninsula as a whole. Using the VAR model and updated data, this study empirically analyzed the arms race between South and North Korea, based on Richardson’s action-reaction model. The empirical findings are as follows: while South Korea’s military expenditure changes are affected by those of North Korea, partially supporting the classical Richardson model as a result, the reverse remains unverified. In fact, this investigation indicates that North Korean military expenditures seem to adhere to the random walk process, and empirically supports the argument that North Korea has pushed for military expansion based on its strategic needs, with South Korea escalating its armament program in direct response. The fact that North Korea’s real military expenditure follows the random walk process indicates that it cannot be predicted at all. There may be some interpretations in terms of the random walk process of North Korea’s real military expenditure. First, it can be interpreted that North Korea’s military preparedness has been determined without any strategic plan. The situation at the time may affect North Korea’s decision on military preparedness. Secondly, considering that North Korea has developed nuclear and missile programs over a long period of time, it cannot be denied that North Korea has kept a long-term strategic plan for military preparedness. Then, it may be said that irrespective of the expansion of South Korea’s military preparedness, North Korea has decided its policy toward military preparedness based on internal strategic goals such as its development and enhancement of asymmetric warfare capabilities. Finally, North Korea has been reported to hide its defense expenditure in other budget categories in order not to reveal how much of its government budget is allocated for this cause. In this respect, more accurate data on North Korea’s military expenditure needs to be collected to have better insight into the arms race between South and North Korea overall. Considering those questions of accuracy surrounding North Korean military expenditure data, the follow-up studies are warranted.