The asymmetric relationship between defence spending and governance agility in NATO countries

IMPACTThis study examines the relationship between defence spending and governance agility for 22 NATO members between 2004 and 2023. The results indicate that there is an asymmetry between good and poor governance agility on defence spending. Deteriorations in governance agility have a stronger adverse effect on defence-spending capacity than equivalent improvements have in expanding it. Therefore, defence budget goals will never replace the underlying budgeting systems that allow for efficient use of public funds through accountability mechanisms (such as oversight and regulation). Policy-makers should view their governance capabilities as a strategic resource that needs to be maintained over multiple policy cycles. The findings also suggest that governance reforms in the defence sector produce benefits gradually, which makes it crucial to protect these reforms from short-run fiscal pressures during periods of economic instability.