Uneven burdens? – An overview of the free-riding problem in NATO

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Journal ISSN
Volume Title
School of Business | Bachelor's thesis
Date
2022
Major/Subject
Mcode
Degree programme
Bachelor’s programme in Economics
Language
en
Pages
33
Series
Abstract
In NATO, the problem of uneven burden-sharing and free-riding has been a central issue since the end of World War II. In the last decade, with the invasion of Crimea in 2014, former president Trump's dramatic changes in rhetoric regarding NATO, and the attack on Ukraine in 2022, the burden-sharing debate has accelerated drastically. Media and international politics have mainly focused on the percentage of the gross domestic product (GDP) applied to military and defense capabilities. However, collective safety does not equal money spent on safety. Burden-sharing in military alliances is a far more complex issue than just the countries' monetary spending on troops, technology, and other resources. This bachelor's thesis provides a comprehensive literature review of the fundamental concepts, context, and measures needed to analyze burden-sharing and free-riding behavior in military alliances. With the Economic Theory of Alliances, the thesis aims to determine what free riding in alliances means and how we should measure it. First, the two well-known economic models – the public goods model, and the joint-product model – are introduced to establish answers on what free-riding in alliances means. Secondly, the different material and non-material measures are discussed to give a comprehensive overview of the different factors affecting free-riding behavior. Contrary to the public discussion and the outrage by President Trump, burden-sharing is a far more complex problem than the percentage of GDP might provide. Free-riding analysis in NATO demands a holistic scholarly approach considering several measures with appropriate nuance. According to the extensive review of recent research, it is clear that measures focusing only on material inputs do not alone provide fair or sufficient answers. Non-material outputs such as willingness to fight, public opinion, out-of-area efforts, and risk-sharing must be considered when determining free-riding behavior in military alliances. How the alliance members use their resources and what kind of outputs their efforts provide will determine the real impact of the revolution on Euro-Atlantic security. As such, analyzing the mixture of input and output measures as the most suitable indicators for determining free-riding behavior remains a topic for further research.
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Thesis advisor
Murto, Pauli
Keywords
NATO, burden-sharing, free-riding, economics of alliances
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