Military Expenditure Convergence in the Selected NATO Countries: Evidence from Non-linear Unit Root Tests

The burden-sharing problem, in other words, the contribution of the member states to bear the costs emerged at a fair rate as a result of NATO activities has become the current issue of NATO in various times. The burden sharing problem came to the fore also in NATO summits in 2014 and 2016, and decisions have been taken to stop the continuous decrease of the defense expenditures of NATO members and to increase the defense expenditures of the countries to 2% of their GDP. In this research, it is aimed to reveal the behavioral tendencies in the proportion of the military expenditures of 14 NATO member states to their GDP in 1960-2014 period and also analyze whether the proportions of the military expenditures of NATO members to the GDP exhibit a convergence behavior at this time to USA that has the highest military expenditure/GDP share. Kapetanios-Snell-Shin and Asymmetric Exponential Smooth Transition Autoregressive models from the nonlinear unit root tests are used and the findings show that the proportion of military expenditures of NATO member states to the GDP converge to the percentage of military expenditures of USA to the GDP, and this manner of convergence has a significantly nonlinear structure