Financing the Grand Strategy of Great and Rising Powers

How can great and rising powers finance their grand strategy? What enables and constrains a state’s ability to finance its grand strategic needs? Under what conditions are leaders able to implement their desired financial strategy? When considering the various means available for financing grand strategy, leaders are concerned with raising revenue to implement their grand strategy as well as staying in power. Financing grand strategy, however, presents an intertemporal dilemma for leaders: a politically costly fiscal sacrifice today for benefits accrued in the future. This chapter advances an analytical framework and offers illustrative examples to understand how leaders navigate this intertemporal dilemma. First, the chapter addresses the scope of the study: military spending of great and rising powers. Second, it presents the various financing options and addresses the short- and long-term political and economic costs of each. Third, it offers three variables that condition leader willingness to incur the short-term political costs of financing grand strategy: regime type, whether a state is a rising or great power, and the degree of clarity in the threat environment.