From Bullets to Balance Sheets: How Military Involvement in the Economy Shapes Leader Survival

From producing consumer goods to managing clubs, banks, and other for-profit firms, many militaries generate revenues that are not part of the military budget and are far removed from the realm of military affairs, and have adverse consequences for societies. Despite their significance, causes and consequences of such activities are largely unexplored. This article investigates the impact of military economic activities on propensity for coups. It argues that as the military expands its role in the economy, it gains both the incentives and opportunities to stage coups. However, this effect varies by rank. Military-run enterprises function as a double-edged sword: while they provide rent-seeking opportunities that reduce the likelihood of rebellion among mid- and low-ranking officers, they also embolden senior officers, for whom economic control becomes a political stake. Leaders may use economic privileges to co-opt mid and lower ranking officers, but as military builds more economic capital, senior officers become less dependent on civilian leadership and more likely to stage coups. Using an original dataset of over 2,800 economic enterprises owned/run by militaries for all countries from 1950 to 2020, I show that coup risk significantly increases as military economic involvement increases, and such coups are primarily led by senior officers.