Military Securities: US CapitalFlows and Military Presence Abroad.

Scholars interested in the link between economic interests and national security have asked whether trade follows the flag. Studies in this vein tend to examine the causal relationship between trade flows and alliances or conflictual events. While informative, this formulation of economic interests neglects a vital--and extremely significant--aspect of US economic power: financial capital. In this paper we use a gravity model of US financial flows--flows of portfolio investment, foreign direct investment and bank lending--and augment it with measures of US overseas military commitments. This allows us to examine whether countries that open their doors to US troops also become more attractive to US overseas investment. We are also able to investigate the converse: whether overseas investment plays a role in attracting US troops. Using panel data from 1950 to the present we determine whether the military follows the money or vice versa. [ABSTRACT FROM AUTHOR]