Conscription and the developing countries

Abstract

Many countries, mostly ones with developing economies, still have conscription. This study explains why, based on the costs of different recruitment systems. A conscription system can be costly to set up, and misallocates labor compared to all-volunteer recruitment, but entails a smaller wage bill. In a developing country with a highly distorting tax system, the burden of taxes needed to finance the higher wage bill of an all-volunteer military can be larger than the burdens that are unique to a conscription system. The highly burdensome taxes that the government of a developing country with a large informal sector must rely upon mean that its variable cost of staffing a government labor force or army by an all-volunteer system is greater than that of a developed country that can levy less distorting taxes. The minimum force size for which conscription has lower cost than voluntary recruitment is higher, the greater the tax distortion. Furthermore, to economize on training cost, a country with a more distorting tax system is more likely to have a lottery, with longer service obligation than if it did not have a lottery. The upshot is that a country with a distorting tax system is more likely to have conscription, and if it does have conscription, is more likely to have a lottery system, with longer service obligation than if it did not have a lottery and drafted an entire age cohort. If our reasoning is correct, countries with less efficient tax systems, wishing to recruit larger fractions of their labor forces, would be more likely to have conscription with longer service obligations. We show that such patterns are indeed present in the data—a cross section of 104 countries observed around 2012. In this way, we explain why many developing countries continue to impose conscription even as the developed countries are abandoning it.

Appendix A.1. Data sources

There are several sources from which one can construct panel data on conscription systems for about 150 countries, from 2008 to 2013. These are CIA (CIA Factbook) [6], IISS (The Military Balance) [15], War Resisters’ International website (WRI) [27], and Toronto [26]. However, only CIA Factbook and Military Balance have updated editions annually, while the other two do not reflect the change in policy of countries in the more recent years. That is a reason why Military Balance and CIA Factbook have been used, while WRI and Toronto [26] are references to consult for past patterns. For cross-section analysis we extract the most recent observations from Military Balance and CIA Factbook and use that to code a dummy variable equal to one if a country is using a conscription system to actively recruit and 0 if it is using an all-volunteer system.

Turning to independent variables, information for government revenue relative to GDP, and percentage of total tax revenue derived from different kinds of taxes, are collected from Prichard [20]. Their dataset was compiled from many sources, including IMF (World Economic Outlook, Government Finance Statistics, and Country reports), OECD, and CEPAL (Comisión Económica para América Latina y el Caribe).

There are two variables for institutional factors. These are British legal origin, Socialist legal origin. La Porta et al. [16] have data for legal origins, but their data does not reflect the post-Cold-War change of East European countries, reverting to German and French legal origins as shown by Siems [22]. We incorporate the Siems changes into our variables.