Article

Journal of Conflict Resolution

2022, Vol. 66(4-5) 729–754
State Security or © The Author(s) 2022
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Exploitation: A Theory of sagepub.com/journals-permissions
DOI: 10.1177/00220027211070574
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Military Involvement in the
Economy

Roya Izadi1 

Abstract
Why does the military in some countries get involved in the economy by running
profit-making enterprises and what leads governments to permit such involvement?
Running household appliance factories, transportation agencies, banks, hotels, etc., are
indeed unrelated to national security and are far removed from the regular roles
assigned to militaries. Such involvement has further implications for both politics and
the economy. I argue that the process of military involvement in the economy functions
as a survival strategy for leaders and a profit-making scheme for the military. Using
original cross-national data on the emergence of military involvement in the economy,
this research demonstrates that militaries are more likely to get involved in the
economy when the military’s institutional interests are at risk and when the gov-
ernment has to rely on the military to maintain power. Leaders allow the military to
benefit financially through economic activities in order to stay in power.

Keywords
civil–military relations, military involvement in the economy, conflict

Introduction
After defeating the Tamil Tiger guerrillas in May 2009, Sri Lankan president Mahinda
Rajapaksa’s administration encouraged the armed forces to become involved in large-

1
Political Science, Binghamton University, Binghamton, NY, USA

Corresponding Author:
Roya Izadi, Political Science, Binghamton University, 4400 Vestal Parkway East, Binghamton, NY 13902-
4600, USA.
Email: rizadid1@binghamton.edu
730 Journal of Conflict Resolution 66(4-5)

scale commercial activities, such as selling food, running travel agencies, hotels, and
restaurants. The Sri Lankan army has since then become an economic player by running
economic enterprises that are usually in the domain of civilian groups. Sri Lanka is not
the only country in which the military is involved in economic activities. There are
dozens of countries around the world whose militaries are active economic players
often accruing millions of dollars outside the military budget.
Military-run businesses differ from state-run enterprises in that the military oversees
the management, production, distribution, and sale of goods and services, while the
profits generated from such activities are directed to the military and spent at the
discretion of higher echelons of the armed forces (Brömmelhörster and Wolf-Christian,
2003; Mani 2007). The benefits from such activities are not part of the defense budget,
and constitute an off-budget source of revenue for the military with little or no oversight
by the government. Military involvement in the economy is an advancement into the
civil sphere with severe consequences for politics and the economy. The military might
stay loyal only to the leaders that guarantee their economic interests and would
therefore have incentives to repress challengers of a status quo that benefits those
interests. Venezuela today is a good example of how the civilian government controls
the military and ensures its loyalty through providing it with access to the economy.
President Maduro has so far survived the political crisis and efforts by the opposition to
unseat him by providing military leaders with significant control over industries and
expanded access to those industries by promoting soldiers.1
Military involvement in the economy has implications for military professionalism.
It diverts the military’s resources from defense purposes to officers’ private enterprises,
and erodes the professional ethics of the officer corps by transforming the officers into
business contractors. When militaries run businesses, their economic interests compete
with their national security obligations which eventually leads to corruption of the
military organization. Such an involvement has implications for foreign policy. Some
militaries not only invest inside their home country, but also establish joint ventures
with companies abroad, invest in the form of foreign direct investment in foreign
countries, and take on contractor projects abroad. The military-turned-economic-player
might affect peace and conflict, military battlefield effectiveness, or the military’s
willingness to fight wars in the first place. Finally, military involvement in the economy
has implications for the economy. A military that enjoys favorable policies from the
government–such as receiving subsidies and tax exemption–and utilizes cheap labor by
using soldiers in economic activities might threaten the private sector through unequal
competition (Mora and Wiktorowicz 2003).
While existing work on civil–military relations has greatly enhanced our knowledge
of the scope of the military’s meddling in politics, no systematic study has analyzed
military economic activities as yet another form of military entrenchment in the civil
sphere. Economic activities are indeed beyond the domain of militaries and should be
considered a diversion from the armed forces’ main role. This article breaks new
ground on this topic, seeking to explain what appears to be a widespread phenomenon
by answering the question: Why does the military in some countries get involved in the
Izadi 731

economy, and what leads governments to permit such involvement? I argue that the
process of involvement of the military in the economy functions as a survival strategy
for leaders and a profit-making business for the military. Using original cross-national
data on the emergence of military involvement in the economy, I demonstrate that
militaries are more likely to become involved in the economy when leaders have to co-
opt the military to maintain power, and/or when leaders need to buy the loyalty of their
militaries as a result of crises that lead to military reconfigurations, like coups or the end
of war.
The next section of the article looks at the literature on military involvement in
states’ political and economic arenas. The ensuing section lays out the article’s theory
and explanations for the causes of military involvement in the economy and proposes
three testable hypotheses. The next section contains the variables outlined in the
hypotheses, discussion about the structure of the data, and analysis and results. The
final section includes concluding remarks and ideas for future research.

Existing Research
Although the importance of the military to the political economy of some countries is
evident, we have limited knowledge of the processes through which militaries operate
within the economic sphere. Scholars of civil–military relations have extensively and
disproportionately focused on different forms of military involvement in politics and
coups (Brooks 2008; De Bruin 2020; Harkness 2016; Little 2017; Powell 2012; Singh
2014; White 2017), and coup-proofing (Böhmelt and Pilster 2015; De Bruin 2018;
Sudduth 2017a) as the main strategies militaries and governments pursue in their
relations with one another. Coups, one of the major causes of unconstitutional leaders’
exit, are considered as observable outcomes (failure events) in a government–military
relationship, and lack of coups are regarded as periods between events or spells. If we
consider civil–military relations as a bargaining interaction between the military and the
government (Svolik 2012), coups should be considered bargaining failures. There are,
however, several options governments and militaries pursue to avoid bargaining failure
and make credible commitments to one another (Feaver 1999). Permitting military
participation in the economy is one tool among others the government and the military
adopt to avoid bargaining failure.
The research on the economic roles of the military is limited. A small number of
historical works and a few case studies have put valuable effort into examining this
phenomenon qualitatively by studying the business networks of military in some
countries.2 Scholars have attempted to explain military involvement in the economy by
focusing on factors such as economic difficulties that necessitated economic reform
(Mora and Wiktorowicz 2003), low state capacity, parochial military organization, and
higher threat conditions (Mani 2007). While existing work on military engagement in
the economy illustrates the underlying mechanisms of this process, these studies are
highly case-specific, and more generalizable work on this fairly widespread phe-
nomenon is needed. There are still numerous countries with military involvement in the
732 Journal of Conflict Resolution 66(4-5)

economy and little or no research has managed to explain the processes that led the
military to become involved in the economy. Furthermore, we still lack a compre-
hensive cross-national empirical study of military involvement in the economy that can
uncover patterns among cases and help us draw the broader picture of the processes
through which some militaries have become economic players. This article contributes
to the literature by bringing together all cases of military involvement in the economy
and proposing a theoretical explanation for the emergence of military economic ac-
tivities, leaders’ goals in allowing such an involvement, and the conditions under which
military intervention in the economy can occur cross-nationally and empirically.

A Theory of Military Involvement in the Economy

Civilian control of the military is known to be the most important issue of civil–military
relations (Croissant et al. 2010; Feaver 2003). The division between civilian political
institutions and the military institutions, as well as the distribution of power between
them, creates the fundamental tension of civil–military relations known as civil–
military problematique: the military institution that is created to protect the state against
threats is powerful, organized, and expert enough to become a threat to the state
(Acemoglu et al. 2010; Feaver 1999). Civil–military relations, therefore, can be
considered a bargaining interaction between the military and the government where
both actors pursue strategies to avoid bargaining failure. In order to do so, they need to
make credible commitments to one another that they will uphold their end of the deal
(Brooks 2019). In more autocratic settings, leaders have used the military as a sharp
instrument to maintain office by employing the armed forces as part of a repressive
apparatus (McLauchlin 2010; Svolik 2013) in cases of collective protests, riots, and
demonstrations since the military is the only organization that can effectively defeat
mass and organized challengers. So, leaders need to co-opt the military in order to defeat
internal and external threats. They must first, bring the military under their control and
create incentives for the military so it fights dissidents on behalf of the government.
What are the government’s options to solve this dilemma and to bring the military
under its institutional control? The literature on civil–military relations has presented
governments’ choices in their dealing with the military as either co-optation or co-
ercion, but most work has disproportionately focused on coercive strategies such as
coup-proofing (Bell and Sudduth 2017; De Bruin 2018; Quinlivan 1999). However,
coercion alone is risky and not an optimal strategy and can lead the military to stage a
coup before losing its ability to stand up to the government (Sudduth 2017a). The risk
associated with pure coercion brings leaders to adopt rewarding strategies in order to
co-opt the military. Rewards take different forms, including increasing the military
budget (Leon 2014), promoting officers, distributing private goods, establishing
pension funds and attractive retirement plans, etc. Monetary benefits and political
concessions to the military are key to keeping the officer corps satisfied, and decreases
in such benefits can increase the military’s discontent (Acemoglu et al. 2010). So, states
can become more immune to military coups if their militaries are sufficiently supplied
Izadi 733

with resources (Desch 1999; Powell 2012) as well-compensated officers will have less
incentive to launch a coup. For this reason, and because leaders need the military to
deter threats to their office and function as their base of support, they need to buy the
military’s loyalty and turn it into part of their constituency by adopting some co-
optation strategies. Military involvement in the economy is a strategy from a menu of
possible options to ensure military loyalty.

Military Involvement in the Economy from the Leadership and Armed Forces’
Perspective
Why do leaders allow their militaries to become involved in the economy? I argue that
leaders cater to the military’s economic interests to achieve two goals. This allowance
functions as first, a coalition-building mechanism through which leaders promote
military’s interests in order to buy the armed forces’ support; and second, functions as a
threat-reducing strategy through which leaders promote military loyalty. In order to
build or maintain a coalition that functions as a supportive force and in order to deter
coup attempts, leaders need to co-opt their militaries by giving the military incentives to
first, be a loyal force, and second, be willing to protect them against threats.
In order to co-opt the military, leaders can pursue several strategies and each of these
strategies can have different implications for the commitment problem described
earlier. When leaders need to credibly commit to the military that they will cater to the
armed forces’ interests in the long term, then they should choose strategies that target
military’s long-term contentment. Military involvement in the economy is a strategy
that targets military’s long-term interests and can be viewed as a solution to the
commitment problem. Increasing military expenditure is a way to appease the military,
but the strategy has two disadvantages compared to military participation in the
economy. First, it only targets short-term satisfaction and the shadow of future decrease
in military spending will work as a deterrent to military co-optation in the long term.
Well-compensated officers with their economic interests tied up with the status quo will
have more incentives to protect the leader and less incentives to stage a coup. It is easier
to decrease or increase the military budget over time but it is extremely hard for leaders
to confiscate the companies under the ownership of the military. For example, since
2004, the Indonesian government committed to end the profit-making ventures of the
Indonesian military and by 2010, the military had managed to keep thousands of its
cooperatives and hundreds of its companies across the country.3 Second, allowing the
military to run economic enterprises is a cheaper option than increasing military budget
especially in cases where the government does not have available resources to fund the
military at higher rates. Military economic activities generate funds that are not part of
the military budget and can be spent at the discretion of military elites whose support is
necessary for the leader to stay in power.
Allowing the military to benefit from economic activities is one form of rewarding
strategies pursued by leaders in order to co-opt the military, buy the military’s support,
and consequently deter coup threats. This strategy is backed by a credible commitment.
734 Journal of Conflict Resolution 66(4-5)

By allowing, and sometimes encouraging the military to profit from economic ac-
tivities, leaders can make up for their inability to provide enough resources to the
military. Adopting this strategy helps leaders generate support and co-opt those ele-
ments of the military that might pose a threat to the regime. If the military extracts a
surplus from the leader that is likely to be unavailable if the leader is not in power, it will
have less incentives to stage a coup and more incentives to protect the leader. Economic
involvement increases the armed forces’ economic and institutional interest in
maintaining the status quo in the current regime, demotivates it from removing the
leader by staging a coup, and gives it incentives to fight the challengers of that
status quo.
Militaries have incentives to engage in profit-making businesses for two main
reasons. First, such involvement brings extra resources and profits that are not part of
the defense budget, and can be distributed as per the wishes of the top echelons of the
armed forces (Abul-Magd and Grawert 2016). For example, Honduras’ military-owned
enterprise, Instituto de Previsión Militar and its conglomerates’ assets were estimated at
more than US $400 million or approximately 10% of the country’s Gross Domestic
Product (GDP) in 1998 (Brömmelhörster and Wolf-Christian 2003, 37). The same year,
the budget for the entire Honduran military was reported at only US $99 million.4
Second, military involvement in the economy provides the military political power.
Economic profits expand the armed forces’ institutional interests beyond the domain of
national security and transform the military into a powerful political organization that
can influence the government and shape policies, leading to accruing more economic
and political power for the military (Mora and Wiktorowicz 2003). In sum, economic
power increases the political power of the military, which leads to higher capital for the
armed forces.
It is important to note that this research does not claim that rewarding the military
through economic involvement would guarantee military loyalty and leader survival.
What it tries to accomplish is to show why under some circumstances leaders allow
their militaries to become involved in the economy. It argues that leaders do so because
coercion alone is not always the optimum strategy and some leaders need a policy
choice that helps them co-opt the military in order to stay in power. How the military’s
decision to remove/protect the leader is influenced by their economic interests does not
fall within the scope of this article. In fact, military involvement in the economy could
pave the way for further entrenchment of the military into politics and allow the military
to evade civilian control in the long term since economic activities make the military
fiscally autonomous and politically powerful. Future research should shed light on the
role of military involvement in the economy and the armed forces’ incentives to
remove/protect the leader.
Furthermore, this research does not claim that military involvement in the economy
is a perfect strategy. Such involvements indeed have many consequences for politics,
the economy, civil–military relations, military effectiveness, corruption, etc. Leaders
choose this strategy despite its consequences because first, they have a limited set of
choices, and second, each choice has its own short and long-term consequences, and
Izadi 735

leaders have to balance them when making decisions. For example, coup-proofing can
decrease military’s effectiveness and power in the long term (Pilster and Böhmelt 2011;
Quinlivan 1999; Talmadge 2016) and can increase the likelihood of military defection
in cases of widespread uprisings (Brooks 2017). However, leaders often favor the short-
term benefits of coup-proofing over military effectiveness and possibility of mass
uprisings in the long term. Same logic applies to the initiation of military economic
activities. Leaders can buy military’s loyalty through distributing economic benefits but
sacrifice military effectiveness in the long term. So, any strategy has its own pros and
cons and the reasons that prompt leaders to select a strategy versus another depend
greatly on strategies that are available to them and the benefits they receive in the short
term as opposed to the costs they pay in the long term. More importantly, such
consequences can be far-reaching even beyond the lifespan of the very leader that
selects a specific strategy, which makes some survival strategies more attractive to
leaders. This research hopes to help cultivate interest among scholars to study different
implications of military economic activities.

The Emergence of Military Involvement in the Economy

When states undergo crises that lead them to reform the military or redefine its in-
stitution or budget, and when leaders have to rely on the military to maintain office, they
are more likely to choose to buy the loyalty of their militaries by allowing them to
become an economic player. Crises such as the end of inter and intrastate war and coup
d’état are critical junctures in civil–military relations that can lead to military par-
ticipation in the economy as a solution to commitment problem involving the military
and the government.

War
Large external and internal threats increase the leaders’ need for stronger militaries in
terms of both their budget and size (McMahon and Slantchev 2015). War termination,
however, alters civil–military relations to some extent. This change is more evident in
cases of wars that have inflicted substantial costs on governments and have brought
about significant political and/or socio-economic consequences. Costly wars, which are
the focus of this study, can influence the post-war strategic environment in multiple
ways that can potentially lead to military involvement in the economy. The aftermath of
costly wars is usually accompanied by some form of reform within the military in-
stitution and/or of its budget. Reform plans are diverse and governments adopt different
sets of reforms depending on how wars end, type of war they have fought, their security
environment, war performance, and the costs inflicted on them. Regarding civil wars, in
cases where war ends with peace agreements, governments adopt security sector reform
programs in order to achieve a credible commitment mechanism between the gov-
ernment and rebels, and to reduce the probability of unilateral defection by the
government (Glassmyer and Sambanis 2008; Huber and Karim 2018; Walter 1997).
736 Journal of Conflict Resolution 66(4-5)

Security sector reforms lead to outcomes such as integration of former rebels into the
military, realigning ranks and positions, monitoring the officer corps, and increasing
transparency (Hartzell and Hoddie 2003; Mattes and Savun 2009). Such reforms
threaten the military institution and scholars have shown that this process can create
incentives for the military to stage a coup before the reforms are implemented (White
2020). In cases of victory for the government, different sets of reforms can have similar
effects on civil–military relations in the post-war period. These reforms are demili-
tarization of the military, reducing military budget, personnel reform, decreasing the
size of military, etc., which could decrease the importance of the military institution that
has recently eliminated a security threat. Although rare, but in cases of rebel takeover of
the government, the commitment problem is more evident since the newly formed
government might retain some elements of the former regime or create a new force
which can increase post-war civil–military divide. Rwanda and Ethiopia are illus-
trations of this scenario where the newly formed government after the end of the civil
war in 1995 and 1991 respectively, had to deal with their dividend security force
(Tareke 2009) and granted the military business interests in order to generate support.
The end of interstate wars are usually accompanied by some reforms such as re-
ducing the number and size of the armed forces and decreasing military expenditures as
well as reconfigurations in the appointments of military personnel after the conflict.
Regarding military expenditures, governments are likely to bring down the size of the
military and military spending in the post-war period since the armed forces are less
likely to be used and less money will be necessary for military hardware and logistics.
Although the end of interstate wars are not always followed by the elimination of
security threats, war termination can reduce military spending since it is sometimes
hard for governments to keep the post-war expenditures at during-war levels. Countries
at international war spend around an additional 2.5% and those at civil war spend
around an additional 1.8% of their GDP on military affairs (Collier 2006, 11). For
example, Pakistan’s military budget decreased by 37.2% following the 1971 war with
India5 even though the security threat posed by India was not eliminated. Similarly, the
end of Iran–Iraq war was followed by 67.68% decrease in Iran’s military expenditure as
well as 33.1% decrease in that of Iraq’s while the two countries remained adversaries
over the years following the war. Furthermore, in such cases that the security threat is
not eliminated, the government has more incentives to keep the military satisfied since
it is more likely that they need to rely on the military to maintain power. Decrease in
military’s resources can create dissatisfaction within the military and can increase the
risk of coups (Leon 2014; Powell 2012). In fact, changes in the military budget can
serve as a determining factor in the military’s attitude toward war termination which can
subsequently increase civil–military tensions after the war (Halperin 1970).
Changes in military spending is not the only factor that influences the post-war civil–
military relations. Wars can potentially cause deeper change in the civil–military re-
lations than merely a financial distress (White 2020). In fact, war termination is not
always followed by sharp decreases in military expenditures. For example, the budget
for Sri Lanka’s military did not decrease after the end of civil war in 2009 but the
Izadi 737

military was set to become one of the major economic players in the country. War
termination can influence future assignments of ranks and roles within the military
which can ultimately fuel civil–military tensions. Wars tend to increase the importance
of the military and military affairs. By the end of the war, field commanders will
become important figures and the military and military service will be popular and
highly valued among the population. Returning from war, the officer corps will demand
both material benefits such as monetary resources and bureaucratic influence (Halperin
1970), and non-material benefits such as status, prestige, and institutional legitimacy
(Cochran 2014) for its having fought a war for the state. In other words, both corporate
interests and institutional legitimacy of the military will come to the fore by the end of
the conflict. This intensifies the problem of civil–military relations in which the military
could potentially possess higher bargaining power in the post-war period. The end of
war reshapes the civil–military relations in that it does not necessarily reduce political
leaders’ reliance on the military for protection while at the same time increases the need
to appease the military and reform its structure and/or its budget. Military involvement
in the economy is a strategy leaders adopt in order to avoid bargaining failure and keep
the military satisfied. Furthermore, military involvement in the economy in the af-
termath of costly wars can direct extra resources and money into the military without
imposing considerable costs on the government. Finally, in cases where wars have
caused infrastructural and economic damages, governments can rely on the military to
rebuild the infrastructure by using military’s resources and manpower. So, the ne-
cessities of decision-making regarding the military in the post-conflict phase intensify
the civil–military problematique and encourage leaders to pursue some rewarding
strategies in order to co-opt the military. Participation in the economy will make up for
the reconfiguration of the security sector and reform processes that take place after
inter-/intrastate wars. Accordingly, the first hypothesis is:

H1: The probability that the military gets involved in the economy increases in the post
inter-/intrastate war phase.
Does the outcome of the war influence the probability of military involvement in the
economy? While war outcomes have different impacts on post-war civil–military
relations, there is less evidence that war outcomes significantly determine the chances
of military involvement in the economy for the following reasons. First, it is not always
apparent which party is to be blamed for a loss and political leaders could be the ones
that are responsible for defeat in the eyes of the elite and citizens. For example, it was
Prime Minister Nikol Pashinyan that was widely blamed for the Armenian defeat in the
war with Azerbaijan in 2020. Pashinyan was even criticized by his top military
commanders, which made him accusing the commanders of attempting a coup.6
Second, the actual outcome of the war is context-specific and political leaders perceive
such outcomes differently (except than some explicit cases of victory/defeat). A
ceasefire might be perceived as a win by a state’s political leaders but a loss for another.
Third, even if the military is blamed by political leaders for unwanted outcomes, losing
a war is even more costly for leaders, and in such cases leaders will have a larger
738 Journal of Conflict Resolution 66(4-5)

survival problem and need the military on their side in order to offset negative
consequences of losing a war. Leaders might be able to purge the undesired elements in
the military after a loss, but they still need to rely on the military and reform its in-
stitution and/or its budget after the war.7

Coup d’état
Regarding coups, in countries where civilian institutional frameworks are weak to bring
the military under the government’s control, the military can pose a threat to the regime
by staging coups or demanding policy change. Coups are symptoms of an unhealthy
civil–military relations and a sign of military’s capacity and willingness to stage future
coups. Coups have “a powerful symbolic impact by legitimizing extraconstitutional
methods as acceptable mechanisms for political transitions (Belkin and Schofer 2003,
608).” Coups are the most frequent type of unconstitutional leaders’ exit (Svolik 2009)
and are the result of bargaining failure between the government and the military (Svolik
2012). Bargaining failure stems from political leaders’ inability to credibly uphold their
end of the deal and their failure “to compensate them [the military] adequately to sustain
a deal (Brooks 2019, 383).” Therefore, leaders that come to power as a result of coups
have to initiate a new bargaining process with the military through which they establish
a coalition or support network in order to maintain power. Such leaders need to credibly
commit to the military that they will indeed uphold their end of the deal and protect the
military’s interests in a new bargaining process. Such leaders have greater incentives to
promote military loyalty and one way to do so is through granting the armed forces
access to the economy. It is important to note that such strategy serves two com-
plementary goals. First, leaders promote the interests of their major source of political
support, namely the military; and second, they deter coup threats as a result of such
strategy. In other words, promoting military’s interests can help them satisfy the
military and therefore decrease their incentives to replace the leader through staging
another coup. For example, scholars have shown that leaders that build and maintain a
loyal coalition of supporters at the time of entry are less likely to be removed by
coalition competition (Sudduth and Bell 2018). One way to build a loyal coalition of
supporters is to co-opt the military through economic involvement.
Furthermore, coups are likely to undermine institutions that serve as checks and
balances against military intervention in politics (e.g. courts and legislatures) (Belkin
and Schofer 2003), and therefore, it would extremely be hard for leaders to pursue other
strategies such as coup-proofing in order to bring the military under their control. So,
leaders that come to power as a result of coups are not only reliant on the military as part
of their ruling coalition and should therefore promote their interests, but they are also
more constraint in their dealing with the military and are left with fewer options to
successfully bring the military under their control. The new leaders have to pursue
strategies in order to co-opt a dissatisfied military that has recently removed a pre-
decessor. One means through which such leaders can lower the risk of future coups and
credibly co-opt the military is to reward the military by allowing its participation in the
Izadi 739

economy. For example, even though Chile’s Pinochet was able to sideline rivals within
the junta, pass legislation to increase his powers and become the president of the
republic, and consolidate a one-man rule, he was still constrained politically. When he
invited the Western educated economists (known as the Chicago Boys) to be appointed
to economic positions, he was increasingly facing oppositions from rival junta
members and in order to survive politically, he still provided economic benefits and
cabinet positions to his officers (Biglaiser 2002). In such circumstances, leaders cannot
pursue pure coup-proofing strategies as it will increase tensions with the armed forces.
Furthermore, even if they were successful in repressing the undesired elements, they
still need to satisfy those whose support is needed to maintain political control. Thus,
the second hypothesis is:

H2: The probability that the military gets involved in the economy increases after a
successful coup.
Do military regimes differ in their dealings with the military compared to civilian
governments that come to power as a result of successful military coup? It is important
to note that successful coups do not necessarily result in military regimes. In fact, only
about 36% of all successful coups from 1950 to 2010 have resulted in military regimes.8
Both military regimes and civilian governments that come to power as a result of a
successful military coup are constrained in their dealings with the military. Military
regimes are significantly more likely to experience inter-service rivalry, coups, and
rebellions (Frantz and Ezrow 2011; Powell 2012), and are the shortest-lived type of
regimes (Geddes et al. 2014a). Civilian governments that come to power as a result of a
coup face similar constraints. Both a ruling junta and civilian leaders have to satisfy
members of the military in order to reduce the chance of disobedience and rebellion,
and one way to do so is to co-opt the military through granting them economic rewards.

Leader Reliance on the Military for Survival

So far, I have established the argument that leaders pursue rewarding strategies through
military participation in the economy to first, benefit their source of support, and
second, deter coup threats. The military is an important actor within some leaders’
ruling coalition on which leaders rely in order to survive in office. Scholars have
examined the sources of this reliance by referring to factors such as higher security
concerns (Svolik 2013) and military’s institutional capacity to exert power over the
political leaders (Geddes et al. 2014a). If leaders need to rely on the military to maintain
power, they should be sharing more resources with them. The government’s reliance on
the military for survival is the main structural factor that leads governments to induce
military loyalty to the status quo by giving them roles in the national economy. For
example, after the establishment of the Republic of Egypt, at first Jamal Abdel-Nasser
sought to appoint qualified civilians to key government positions and invited educated
economists to run the economy. Yet, he was highly dependent on the military and under
pressure of his minister of war, Abdel Hakim Amir, in decision-making and in order to
740 Journal of Conflict Resolution 66(4-5)

not displease the military, Nasser gradually paved the way for the increasing role of the
military in the economy (Abul-Magd 2017, 65). The more the leaders have to rely on
the military for political survival, the more they need to pursue strategies to co-opt the
military and one such strategies is granting the military economic rewards. Thus, the
third hypothesis of this research is:

H3: The probability that the military gets involved in the economy increases as
government reliance on the military for political survival increases.

Data and Methods

Dependent Variable: The Emergence of Military Involvement in the Economy
The analyses cover years from 1950 to 2010 with country-year as the unit of analysis.
As no systematic data on the military involvement in the economy exists, I have
collected the first year of military participation in the economy for all countries with
existing military and population above 500 thousand.9 Over that period, militaries in
47 countries initiated profit-making economic activities. The dependent variable,
Military Business Initiation, is a dichotomous variable that takes the value of 1 the year
the military established, bought, received, or took control of an economic enterprise in a
given country, otherwise it is coded as 0. Since this study’s aim is to explain why the
military in some countries initiates economic activities, the main dependent variable
marks the year the military starts running an enterprise (first year of involvement) and
subsequent years in which the military is involved in the economy are dropped. Future
studies should shed light on the processes through which militaries maintain, expand, or
limit their involvement over time.
I define military involvement in the economy as any kind of formal profit-making
economic activity by branches of the military or military officials that operate on behalf
of the military organization. Such activities must generate profits for the military or its
members and cannot be self-sufficient or non-profit developmental activities.
The military in this analysis includes armed forces and their affiliated organizations
(such as army, navy, and air force) and individuals that are not considered civilian (such
as active duty generals and officers). Economic activities of individuals are considered
as military involvement in the economy only if they operate on behalf of the military
organization.10 Such activities generate profits for the military or individual officers.
For this reason, I do not consider economic activities that provide the military with its
own basic needs (such as food or clothing) and developmental roles (such as disaster
assistance) as economic involvement. Furthermore, I do not consider illegal economic
activities, such as smuggling, as military involvement in the economy since this study is
concerned with the institutional efforts of the military as an organization to run/manage
economic enterprises within the country’s established norms in order to generate funds
for the military. Examples of military involvement in the economy are production of
goods, banking, services, administration, insurances, education, etc., for the public that
Izadi 741

generate profits for the military and its members. So, the dependent variable captures
the year the military becomes involved in the economy by running a profit-making
enterprise.
The data is collected through an extensive study of the military in every country.
Official government and military websites and reports, military-run companies’ official
websites, academic and historical researches, research organizations, and news
agencies have been consulted for the verification of the existence of military in-
volvement in the economy and identifying the first year of involvement. Multiple
sources, mainly historical research and case studies as well as governments’ official
reports have been consulted in order for a case to be included in the list of countries with
military involvement in the economy. That being said, this research acknowledges the
fact that reporting could be an issue in capturing cases of military involvement in the
economy, especially in underrepresented countries with regards to historical research
and access to government and military platforms. However, such difficulties should not
hinder scholars from investigating the phenomenon. The hope is that this research
would serve as the first step in examining military economic activities empirically and
cross-nationally and foster interest among scholars leading to further exploration of the
topic.
Figure 1 is a visual representation of countries where militaries have been involved
in the economy from 1950 until 2019. Among these countries, the military in Ar-
gentina, Brazil, and Thailand initiated their economic activities prior to 1950,11 and the
military in Qatar, South Sudan, and Ghana initiated their economic activities after 2010.
There remains total of 47 countries whose militaries initiated economic activities from
1950–2010 and are the focus of this study. It is important to mention that during this
period and out of the 47 countries in the sample, the military in four countries of India,
Haiti, Paraguay, and Uruguay terminated their involvement in the economy and did not
resume economic activities.12 An important avenue for future research is to examine
conditions under which some governments succeed in persuading the military to
completely abandon economic activities or decrease their extent of involvement.

Independent Variables
To test H1, I code the variable Post-war Period as 1 if an interstate or intrastate war has
ended in the country within the last 6 years and 0 otherwise.13 I draw the data on inter
and intrastate conflicts from the UCDP/PRIO (Uppsala Conflict Data Program/
International Peace Research Institute, Oslo) Conflict Termination Dataset (Kreutz
2010). Armed conflict is defined as “a contested incompatibility that concerns gov-
ernment and/or territory where the use of armed force between two parties, of which at
least one is the government of a state, results in at least 25 battle-related deaths in a
calendar-year” (Kreutz 2010, 2). However, because this study is concerned with wars
that result in socio-economic reconfigurations, I include only conflicts that result in at
least 1000 battle deaths. The theory suggests that costs incurred by war lead both the
military and the leader to choose the economic involvement option to make up for the
742 Journal of Conflict Resolution 66(4-5)

Figure 1. Countries with military involvement in the economy 1950–2019 (Software: Tableau).

post-conflict reconfigurations. Not all conflicts identified by UCDP data are costly for
the leaders and the military so I only include conflicts that reach 1000 battle deaths by
consulting the Cumulative Intensity variable in the UCDP data. As recommended by
Thyne (2017), civil wars in the UCDP data that are captured as coup events in the
Powell and Thyne data (2011) are recoded to 0. They are recoded in order to distinguish
coup events that have led to more than 25 fatalities from civil wars thus avoiding
conflating the impact of war estimators and biasing the results.14
One might argue that interstate and civil wars have different implications for civil–
military relations and, therefore, they should be treated separately in the analysis. In the
context of military involvement in the economy, however, both interstate and civil wars
should significantly impact the chance of military involvement in the economy due to
post-war reconfiguration of the civil-military relations. To address the concern that
either civil or interstate war might be the variable significantly driving the results, I
estimate a model with inter and intrastate conflict as separate variables. Furthermore, to
address the concern that different war outcomes might drive the findings related to war
termination differently, I also estimate a model that further disaggregates war outcomes
by consulting the UCDP dataset.
Izadi 743

To test H2, I code the variable Post-coup Period as 1 if a country has experienced a
successful coup in the last 6 years and 0 otherwise.15 Data on coup events are drawn
from Powell and Thyne (2011). To test H3, I use the “major support group” variable
from V-Dem’s dataset in order to capture government reliance on the military
(Coppedge et al. 2019). The variable “Regime Reliance on the Military” ranges from
0 to 1 representing the extent to which the military constitutes the major support group
the regime relies on in order to maintain power. Higher values indicate higher gov-
ernment reliance on the military. The variable captures the extent of government
reliance on the military explained in this article best since it takes into account sources
of regimes’ political support independent of political institutions (but does not exclude
them). For example, the military can still constitute a major source of regimes’ political
support even in the absence of direct military intervention in politics. It captures the
extent to which the regime needs the support of the military and if the military were to
retract its support, the likelihood that the regime would lose power would significantly
increase (Coppedge et al. 2019, 135).

Control Variables
I also include a set of economic and political control variables. The first is a measure of
the extent to which the government has adopted repressive strategies against the
military and civilian elites to control for whether coercive strategies will affect leader’s
decision to either please the military through economic means due to high threats or
reduce the chances of distributing such private goods due to monopoly over political
power. I use Banks’ data on the number of elite purges in a year to control for repressive
behavior of the government (Banks 2020). The variable “Purges” captures the numbers
of “any systematic elimination by jailing or execution of political opposition within the
ranks of the regime or the opposition” (Banks 2020, 11).
The next control variable is Coup History which is the number of coups the military
has staged against the government in the past (since 1950, which is the beginning year
of the analysis) using Powell and Thyne (2011) dataset to control for the military’s
institutional capability to exert power over the government. I also control for different
regime types using Geddes, Wright, and Frantz’s Authoritarian Regimes Data Set
(Geddes et al. 2014b). Variables “Military Regime,” “Party Regime,” “Personalist
Regime,” and “Democracy” are coded as 1 if a military, party, personalist, democratic
regime there is in place respectively, and 0 otherwise.
The next control variables are the country’s “GDP per Capita (log)” and “GDP
Growth” from Gleditch dataset (Gleditsch 2002) to control for a country’s level of
development and economic conditions. The next set of control variables are “Military
Expenditure (log),” “Percent Change in Military Expenditure,” and “Military Per-
sonnel (log)” to control for characteristics of militaries. I use the updated version of the
Correlates of War data on countries’ national material capabilities, which includes data
on military expenditures and personnel (Singer et al. 1972). I include “Population
(log)” using the Correlates of War Project to address the possibility that countries with
744 Journal of Conflict Resolution 66(4-5)

larger markets might experience higher probability of military involvement in the

economy.

Results
Table 1 summarizes the empirical findings. Since the dependent variable is dichoto-
mous, I use logistic regression along with clustered standard errors on country to
account for within-country correlations. Model 1 presents the results with only the main
independent variables, and model 2 presents the results with main independent var-
iables along with controls (main model). Model 3 splits the post-war period into two
variables, post-interstate conflict phase, and post-civil war phase to control for the effect of
different types of conflict. Model 4 further splits the post-war period and accounts for the
possibility that the outcome of war would significantly impact the likelihood of military
involvement in the economy. The model includes whether a country has experienced a war
and won in the past 6 years, whether a country has experienced a war and lost in the past
6 years, and whether a country has experienced a war in the past 6 years and the war did not
result in a win or loss (ended in peace agreement/ceasefire/no outcome). I consulted UCDP
dataset’s “outcome” variable to code the mentioned variables.
Hypothesis 1 suggests that militaries are more likely to become involved in the
economy in the post-war phase. The results of all 4 models are consistent with hy-
pothesis 1 and are significant at between p < .001 and p < .05 levels across the four
models. Model 2 suggests that controlling for other socio-economic factors, the
likelihood of military business initiation increases significantly in the post-war period at
p < .001 level, supporting hypothesis 1. The results in model 3 show that post interstate
and intrastate conflict phase separately increase the likelihood of military involvement
in the economy at conventional levels, consistent with the proposed theory. The results
of model 4 show that the likelihood of military involvement in the economy increases in
the post-war phase regardless of the outcome of the war. These findings suggest that
despite the diversity of ways wars end, and despite various impacts wars can have on
civil–military relations, the military remains a significant organization whose interests
should be taken into account by political leaders in the post-war period. Militaries can
still be blamed for poor performance in a war, but they are still a major actor with
significant bargaining power in the post-war environment.
Hypothesis 2 suggests that militaries are more likely to become involved in the
economy in the post-successful coup phase. Similarly, post-successful coup period
increases the likelihood of military business initiation at at least p < .01 level across all
models. Successful coups can have other consequences than intervention in politics,
one being the entrenchment of the military in the economic life of societies. Inter-
estingly, military involvement in the economy happens in post-successful coup
countries where we don’t observe military government in place. Military regime does
not significantly impact the likelihood of military involvement in the economy in any of
the models. These findings show how civilian leaders are constrained in their rela-
tionship with their militaries in the fragile post-successful coup environment and should
Izadi 745

Table 1. Determinants of Military Involvement in the Economy.

(1) (2) (3) (4)

End of war/6 years 2.194*** 1.947***

(0.339) (0.338)
Successful coup/6 years 1.360*** 1.600** 1.633** 1.425**
(0.381) (0.513) (0.531) (0.502)
Regime reliance on the military 1.280** 1.849*** 2.280*** 1.981***
(0.431) (0.509) (0.557) (0.548)
End of interstate war/6 years 1.812**
(0.697)
End of civil war/6 years 1.174*
(0.468)
End of war (win) 1.677**
(0.566)
End of war (no win/lose) 1.556***
(0.439)
End of war (lose) 2.254***
(0.615)
Controls
Coup history 0.150** 0.151** 0.157***
(0.047) (0.047) (0.047)
Purges 0.327* 0.288* 0.333**
(0.129) (0.137) (0.125)
Military regime 1.619 1.585 1.689
(1.072) (1.027) (1.051)
Party regime 1.297 1.333 1.219
(1.055) (0.993) (1.032)
Personalist regime 0.152 0.141 0.102
(1.071) (1.007) (1.035)
Democracy 1.744 1.877 1.788
(1.087) (1.076) (1.083)
GDP per capita (log) 0.319 0.294 0.414
(0.268) (0.299) (0.275)
GDP growth 0.737 0.226 0.618
(2.681) (2.710) (2.753)
Military expenditure (log) 0.236 0.221 0.229
(0.209) (0.231) (0.211)
Change in military expenditure 0.012 0.011 0.011
(0.008) (0.008) (0.008)
Military personnel (log) 0.158 0.194 0.228
(0.221) (0.230) (0.225)
Population (log) 0.003 0.075 0.034
(0.250) (0.282) (0.279)

(continued)
746 Journal of Conflict Resolution 66(4-5)

Table 1. (continued)

(1) (2) (3) (4)

Constant 6.584*** 9.420*** 9.101** 8.520**

(0.319) (2.625) (2.901) (2.753)
Observations 5613 4467 4467 4467
Wald χ 2 110.3 155.8 117.2 134.6
*** p < .001, ** p < .01, * p < .05, two tailed tests. Robust standard errors in parentheses. The dependent
variable in all models captures the year the military initiates the first economic activity. All models use logistic
regression with clustering on the country.

buy their support in order to deter future coup attempts. Hypothesis 3 expects that
militaries are more likely to become involved in the economy as the leader relies more
on the military to remain in power. Higher reliance on the military significantly in-
creases the likelihood of military economic involvement initiation at at least p <
.01 level across all models supporting hypothesis 3. The more the military is the actor
whose support is necessary for the government to maintain power, the more likely the
military needs to be accommodated through distributing private goods, and one such
private goods is involvement in the economy.
The results for the control variables are interesting in that none of the control
variables except coup history and purges significantly affect involvement initiation
across all models. The more coups a country has experienced the more likely that
country experiences military involvement in the economy suggesting that the military’s
institutional capacity and willingness to intervene in politics can help us understand
whether leaders are more likely to adopt rewarding strategies in order to co-opt the
military through economic involvement. What is noteworthy in the analysis is that
variable “Purges” is statistically significant in all models suggesting a correlation between
purges as a repressive strategy and military involvement in the economy as a co-optation
strategy. This finding complements earlier findings in the literature by Sudduth (Sudduth
2017b) that leaders that come to power as a result of successful coups are more likely to
eliminate rivals through purges and as a result, decrease coup risk. The results of this article
suggest that such leaders do not only pursue purges and that they also pursue some re-
warding strategies such as benefiting the military through involvement in the economy in
order to maintain power. Rewarding and repressive strategies are not mutually exclusive
and leaders do use carrots and sticks simultaneously in order to maximize their chances of
survival. Furthermore, in their research, Sudduth and Bell show that leaders that come to
power as a result of successful coup are less likely to be overthrown through future coups
because they are more likely to use a strong and loyal coalition of supporters and convey
strength to the opposition (Sudduth and Bell 2018). This article complements Sudduth and
Bell’s findings by showing that one way leaders manage to maintain a loyal coalition of
supporters is through granting the military economic benefits. Future research should shed
light on the impact of military economic activities on the extent to which the military
remains a loyal ally to the leaders.
Izadi 747

Robustness Tests
In order to address the possibility of endogeneity and explore potential bias from
omitted and unobserved variables, I employ several analyses by controlling for the
factors that affect the likelihood of coups, wars, and regime reliance on the military as
well as military involvement in the economy (available in the Supplementary material).
I first reran the main model (model 2) and included the variable, failed coups, to control
for the possibility that unsuccessful coups might also prompt leaders to direct monetary
resources to the military in order to avoid future coups. I also reran the model using
lagged independent variables to address the possibility of endogeneity problem in the
models. I then ran the model using expenditures per soldier instead of overall military
expenditure. Furthermore, I controlled for additional variables that influence military
capability and willingness to intervene in the civilian sphere that are also related to
wars. These variables are anti-government protests, instability, government crises, and
cold war years. I also controlled for additional economic variables that might influence
militaries’ decision to become involved in the economy such as percent GDP origi-
nating in industrial activities, total value of a country’s exports, and total value of
imports (log). In none of these model specifications did the main findings change
significantly. Furthermore, I ran the main model using Cox-proportional hazard
estimation to account for duration dependency and allow a flexible distributional
form since I do not expect the duration dependency to exhibit a particular form
(Box-Steffensmeier and Jones 2004).
I explored in more detail the possibility that militaries that already have access to
political institutions have higher probability of getting involved in the economy. I used
White’s data on the count number of active duty military officers in the government
(White 2017) to control for this possibility. I also explored further the possibility that
militaries might still enjoy freedoms and political concessions without holding gov-
ernment positions and examined in more detail whether militaries that face lower
civilian oversight are the ones that drive the main findings by using the measure of
civilian control of the military offered by Kenwick (2020). None of these specifications
substantially changed the main findings. These results show that militaries can still
constitute an important member of leaders’ ruling coalition without directly being
involved in politics. The military officials can be considered a major sources of re-
gimes’ political support even in the absence of military governments and direct in-
fluence on policy-making through holding cabinet positions as both White and
Kenwick’s indicators capture more direct military’s influence on politics. The V-dem
indicator takes into account the extent to which the military’s support is necessary for
the leader to stay in power.
I also ran further survival analyses using Kaplan–Meier survival estimates for the
end of war and successful coup variables. The results suggest a striking difference in
failure rates between countries that experience end of war and successful coup
compared to ones that do not experience these events. I then ran the main model using
different time spans for post-war and post-coup phase (from 2 to 5 years) variables.
748 Journal of Conflict Resolution 66(4-5)

Furthermore, in order to reduce bias associated with rare events data, I ran Penalized
Maximum Likelihood Estimation model using Firth method (Firth 1993). None of
these model specifications changed the main findings. Finally, in order to establish the
causal link between war termination and military involvement in the economy more
narrowly, I paired the statistical analysis with case studies of 4 countries (included in the
Supplementary material) to probe the causal mechanism further. I used a typical case
approach (Gerring 2006) and picked two cases of interstate and two cases of civil war
with different outcomes in order to illustrate the mechanisms proposed in the article.

Conclusions
Post-coup and post-war periods are among the most critical phases for civil–military
relations during which the government–military bargaining process can produce
consequential outcomes such as the emergence of military involvement in the economy.
The results of logistic analyses as well as survival analyses support the expectations that
the likelihood of military business initiation significantly increases in the post-war and
post-successful coup phase, and as the government relies more on the military in order
to maintain power. Involvement of the military in commercial activities can be un-
derstood as government’s payment to the military in return for military’s support.
Despite the difficulties, a closer look at the role of the military in the economy will
open a new window into its impacts on the market and society, which holds important
lessons for both policy-makers and scholars. Military involvement in the economy
transforms civil–military relations by shaping leaders’ survival and militaries’ market
interests. Once a military becomes an economic player, it is extremely hard for
governments to convince them to abandon economic activities. From 47 countries that
experienced military involvement in the economy since 1950 until 2010, only four
countries have managed to terminate military economic activities with one country
(Haiti) through the dissolution of the military itself. For most cases, such termination
occurred over long-term processes of bargaining with the military.
Military economic activities have fostered human rights violations in affected
countries around the globe in the form of using conscript labor in military-owned
industries, torture and abuse of workers, and displacement of indigenous populations.16
Military economic activities inevitably lead to corruption and pave the way for creation
of or reinforcing the existing unequal markets by giving the military unfair benefits.
Favorable policies such as tax breaks, subsidies, access to infrastructure and military’s
equipment and facilities, use of cheap and conscript labor, military’s commercial and
technological advantage, and the unavoidable corruption that ensues such activities
undermines market competition and distorts the civilian economy. This makes the
private sector weak and unable to compete with military’s corporations in the market
(Mora and Wiktorowicz 2003).
Military involvement in the economy has worsened civilian control of the military
over time in many affected countries. The Iranian Revolutionary Guards Corps (IRGC)
in Iran, for example, has grown from a dependent force in the 1980s and early 1990s
Izadi 749

into a giant business conglomerate that has consistently threatened the very estab-
lishment that has created the organization. For example, in 2004, its forces occupied
with military vehicles Iran’s biggest international airport in Tehran during the airport’s
inauguration in opposition to the government’s contract with foreign companies and not
the IRGC-owned firms.17
Participation of the military in the economy gets in the way of the military’s first and
foremost task, which is effective defense of the country. Furthermore, scholars usually
take the countries’ reported annual military budget as the primary source of military
income in their analyses. However, in many countries, the annual budget provided by
the central authority constitutes only a portion of what the military in reality consumes.
For example, it is reported that the official defense budget in Indonesia only accounts
for one-quarter to one-third of real military expenditures (Brömmelhörster and Wolf-
Christian 2003, 1). If we take the profits made by such militaries and add them up to the
annual military budgets, we would get a very different picture of military expenditures
around the globe.
Many other questions can be asked such as does military involvement in the
economy influence foreign policy decision-making regarding peace and conflict given
the way conflict impacts military’s profits? Does it affect other outcomes such as
economic growth, or military effectiveness and combat readiness? This article calls for
more attention by political science scholars to the understudied yet important topic with
a whole set of unanswered questions.

Acknowledgments
I would like to thank the editors for their time, and the two anonymous reviewers for their
insightful suggestions and feedback. I am grateful to David Clark, Benjamin Fordham, Katja
Kleinberg, Sabrina Karim, Peter White, Amanda Licht, Erica de Bruin, Wendy Martinek, Seden
Akcinaroglu, Peyman Asadzade, Navin Bapat, Kyle Beardsley, Peter Feaver, Chris Maiorana,
Rosella Cappella, and Kaija Schilde for their helpful comments on earlier versions of this article. I
would also like to thank the participants of Peace Science Society meeting (2019), Triangle
Institute for Security Studies Annual New Faces of International Security Conference (2020), and
Boston University Political Economy of Security Workshop (2021) for their comments. All errors
are mine.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship,
and/or publication of this article.

Funding
The author(s) received no financial support for the research, authorship, and/or publication of this
article.
750 Journal of Conflict Resolution 66(4-5)

ORCID iD
Roya Izadi  https://orcid.org/0000-0002-5205-9122

Supplemental material
Supplemental material for this article is available online.

Notes
1. See: https://www.miamiherald.com/news/nation-world/world/americas/venezuela/article210233099.
html.
2. See, for example, Abul-Magd and Grawert 2016; Brömmelhörster and Wolf-Christian 2003;
Chambers and Waitoolkiat 2017; Cheung 2001; Marshall 2015; Mulvenon 2016.
3. See: https://www.hrw.org/report/2010/01/11/unkept-promise/failure-end-military-business-
activity-indonesia.
4. Data is drawn from Correlates of War Military Expenditure Dataset (Singer and Stuckey
1972).
5. Data is drawn from Correlates of War data on countries’ national material capabilities (Singer
and Stuckey 1972).
6. See: https://www.bbc.com/news/world-europe-56194421.
7. Please see the Supplementary material for more illustration of the causal mechanism in cases
studies presented.
8. Data on coups are drawn from Powell and Thyne (2011), and data on military regimes are
drawn from Geddes et al. (2014a).
9. This is the population and time period for which most data is available.
10. In most cases, involvement is initiated through establishment of a company/conglomerate
that is owned or is directly run by the military organization. More information is available in
the Supplementary material.
11. For this reason these three countries are omitted from the sample.
12. The end of military economic activities in Haiti was the result of the dissolution of the
military in 1995.
13. For robustness checks, I estimated the models using other periods (2–5 yrs). The substantive
results remain the same.
14. I consulted Correlates of War Dataset (Sarkees and Frank 2010) and coded Bangladesh war
of 1971, which is not coded in the UCDP data. The results remain the same without this
change (included in the Supplementary material).
15. I will present models with other time spans in the Supplementary material with results
remaining significant.
16. See: https://www.nytimes.com/2019/08/05/world/asia/myanmar-military-business-united-
nations.html.
17. See: https://www.bbc.com/persian/iran/story/2004/05/040511_ssabaairport
Izadi 751

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