Thursday 12 December 2024

CDT Vincent Joassin / Royal Military Academy

Abstract - This paper addresses the question: How do political narratives influence military expenditures? While existing research tends to rely on objective metrics, such as geographic proximity, to assess threats—a key determinant of military spending—these approaches often overlook the subjective perceptions that shape policy decisions. Previous work has not fully considered how narratives, as collective expressions of significant events, contribute to the perception of threat and, consequently, to defense budgets. To address this gap, this paper introduces a theoretical framework that incorporates narrative analysis into the economic modeling of military expenditures. Building on Becker’s sentiment analysis, which connects public sentiment to spending behavior, this study extends the analysis to include different forms of narratives, such as public opinion, government rhetoric, and political discourse. The study employs desk research to review and synthesize existing theories, followed by a discussion of potential methodologies for incorporating narrative data into economic models by leveraging recent statistical techniques from the Natural Language Processing (NLP) subfield in computer science to quantify these narratives. While empirical testing is outside the scope of this study, the aim is to lay down the groundwork for future research to empirically validate the proposed framework. By advancing the idea that narratives can serve as a useful yet underutilized variable in the assessment of military spending, this article aims to open new avenues for research and policy analysis in defense economics, opinion research, and foreign policy.

​Narratives as a determinant for assessing military expenditure

Thursday 13 February 2025

Nick Houttekier / Royal Military Academy

Abstract - In a globalized world, geopolitical tensions can have a negative impact on the business operations of firms. Such tensions can pose an even bigger risk to multinational corporations (MNC), as they have their assets spread over multiple countries. An MNC could, for example, become the victim of economic statecraft, or could see the value chains between its subsidiaries disrupted by trade restrictions or tariffs. In this paper, we aim to investigate whether corporate concerns about geopolitical developments have increased over time and whether multinational corporations worry more than their domestic or regional peers. We develop a new index to examine to what extent publicly listed firms are concerned with geopolitical risks by measuring how often they mention terms linked to geopolitics in their annual reports. The quantitative, text-based approach for the indicator is inspired by other indexes, such as the geopolitical risk index of Caldara and Iacoviello (2022). We use our own index to investigate whether publicly listed firms have increasingly worried about geopolitics throughout the last 13 years and to verify if multinational corporations do indeed worry more about geopolitical developments. The results of this study contribute to the academic debate on the impact of heightened geopolitical tensions on MNCs and to the growing literature on geopolitical risk monitoring.

​ Perceived Geopolitical Risk in Multinational Corporations

Thursday 13 March 2025

Dennis Essers and Kristel Buysse / National Bank of Belgium

Read the article here

De-risking European trade with China: Implications for Belgium

Friday 8 November 2024

Michelle Haas / Ghent University

Abstract - Political leaders have frequently referred to Russia’s full-scale invasion of Ukraine as a ‘wake-up call for Europe’. This article examines whether Russia’s war against Ukraine truly constituted a transformative moment for European defence and had a harmonizing effect on the defence policies of European states. More specifically, we compile an extensive overview of the changes in the European national defence policies after February 2022. By triangulating expert interviews with document analysis, we assess changes in European defence policies on two dimensions: (1) European states’ perception of the Russian threat and (2) military expenditure. The results of our study indicate that, despite nearly all European states now viewing Russia as a threat, significant differences in threat perception levels persist. Additionally, this 'strategic cacophony' in threat perceptions results in varying military expenditures. The geopolitical shock of the 2022 war in Ukraine, thus, has only led to a very moderate convergence of European states' defence policies.

​ European Defence Policy Changes after Russia’s 2022 Invasion of Ukraine: a ‘Wake-Up Call’ in Practice?