Does Neutrality Make a Difference? Explaining Patterns of Swiss Defense Spending in 1975-2001

This paper studies defense spending in Switzerland in 1975-2001. It determines how neutrality in international affairs (non-membership in military alliances) affects defense spending. The authors find that neutrality is associated with a perception of lower levels of external threat; hence it confers economic benefits in the form of a smaller defense burden. However, neutrality does not fully insulate a country from variations in the level of external threat in the global system as perceived by members of military alliances. Swiss defense spending has tracked very closely the spending trends - but at a lower average level - of the United States and other NATO countries. The authors conclude that Swiss defense spending patterns are likely to remain the same in the future.

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