The Political Economy of Scandinavian Neutrality

The article examines whether three of the neutral nations of Eu rope (Sweden, Switzerland and Finland) have adhered to their choice of armed neu trality by being self-reliant on their own defenses. Using a joint product model , the authors specify a reduced-form equation for a nation's demand for military expenditures. Empirical estimates of these demands suggest that Sweden free rod e on NATO after institution of the doctrine of flexible response; however, the o thertwo netural nations have been self-reliant throughout the period 1957-82. W ith pooled data, cross-equation restrictions highlight theessential differences between NATO and nonaligned Scandinavian countries.