The Rationality of Defense Finance Management in NATO Countries in the Face of the Russia-Ukraine War
Purpose: The aim of the article was to assess the rationality of national defense expenditure in NATO countries in the period 2014–2023 in accordance with the models of capitalism concept drawn from New Institutional Economics. Design/Methodology Approach: Models of capitalism are understood as systems of complementary institutions characterized by internal similarities in fundamental institutional solutions in the countries representing them. The analyzed group of NATO countries was divided into six models: continental, Mediterranean, Nordic, Anglo-Saxon, patchwork. The United States served as a specific point of reference for all models. The period of analysis covers the years 2014-2023. Practical Implications: The results obtained revealed a peculiar paradox. Countries with a patchwork model make enormous efforts in national defense, but this does not translate into high rationality of these expenditures. Defense can only truly develop if it benefits from a steady source of investment over many years and decades. Starting a proper industrial cycle in the field of defense in Central and Eastern European countries requires long-term planning and investment. Originality value: The results presented in this study open a discussion on the direction of national defense spending and fit into the broader context of research on the effectiveness of such spending. The level of national defense spending should be assessed in the context of the restrictions imposed by EU fiscal rules and the overarching objective of the state, which is stable, balanced and sustainable economic growth. Originality value: In countries with a patchwork model, the situation in terms of defense spending differs from the pattern characteristic of the US, the UK and countries with a Nordic and continental model. Analytical studies have confirmed that it will become increasingly difficult for individual nations to develop their own national, stand-alone defense systems. The costs are high for Europeans because individual national development programmes face strong international competition and cannot fully exploit economies of scale.