THE ROLE OF MILITARY EXPENDITURE IN THE DEVELOPMENT PROCESS: THE ARGENTINA CASE 1946-1980

Argentina is a particular case of underdevelopment within the Third World. "As early as 1895, according to Michael G Mulhall, the Argentine per capita income was about the same as those of Germany, Holland, and Belgium, and higher than those of Austria, Spain, Italy, Switzerland, Sweden and Norway"l. "From 1860 to 1930 Argentina grew at a rate that has few parallels in economic history, perhaps comparable only to the performance during the same years of other countries of recent settlement. The expansion was most remarkable up until the outbreak of World War I; the fifty years before 1914 in Argentina witnessed one of the highest growth rates in the world for such a prolonged period of time"2. The onset of economic troubles began with the Great Depression (1929-32). "Between 1925-29 and 1930-34 the international terms of trade of Argentina deteriorated sharply. At the same time, the export quantum fell by more than 6 percent, and the net capital inflow decreased. The quantum of merchandise imports dropped by nearly 40 percent"3. Yet the Argentine economic performance during and after the Great Depression was not very different from that of other countries of recent settlement: Australia's performance was similar to that of Argentina while the Canadian one resembled that of the United States.

However, a military coup in 1930 interrupted a long period of civilian governments, starting with the "National Reorganization" after the fall of Rosas in 1852 and consolidated through the first Roca presidency in 1880-86. Yet in 1928 Argentina was a prosperous country, with exports of 200 million gold sterlings (twice as much as in 1913)4. President Yrigoyen -who had been elected in 1928 -was overthrown by the military in September 6, 1930 and replaced by Gen. Uriburu 5 .
Military spending rose sharply in the 1920s, as well as the number of men under arms (from 17 743 in 1920 to 22 373 five years later and 25 079 in 1930, i.e., a 40 percent increase over the decade 6 • Military expenditures increased notably in the 1930s., particularly during General Justo's administration (1932)(1933)(1934)(1935)(1936)(1937)(1938)7 and the military (as we shall see later) played an important role in the development of an iron and steel industry from the early 1940s.
The ousting of Castillo in June 1943 8 marks an important stage in the process of politicization of the armed forces.
Since 1943 the "repressive apparatus of the state-party" contradiction becomes the core of the problem of the coup d'etat 9 . Besides, the ousting of Castillo preannounces the emergence of peronism.
"The sums assigned to defense in the post-war years seem to be unusually high, even taking into account the favorable economic situation and the willingness of replacing their equipment on the part of the armed forces". The defense/public expenditure ratio rose from 16. 61 Table 1).
This upward trend corresponded to an advanced stage of the process of importsubstitution, in which the military industries dependet on the Army's General Directorate of Military Factories created in 1941, played an important role. One of the purposes of the First Five-Year Plan was to avoid the reliance on foreign borrowing "The Peron Government was in the process of paying up the last of Argentina's foreign debt as another step toward achieving economic independence".  Table 3).
As early as 1936 the General Directorate of Army Equipment (Direccion General del Material del Ejercito, DGME) was created, followed by the Cuartel Maestre General (CMG) in 1937 which was responsible for the planning and provision of Army supplies having "to promote the development of the industrial branches necessary to provide the needs of national defense" .
The Since 1941, all these factories have been under the direction of the Army's General Directorate oj Military Factories, (Direccion General de Fabricaciones Militares) which in this period initiated the building of a sheet-steel plant despite the scandal on the occasion of the tendering after which, "future Army purchases were removed from the jurisdiction of Miranda (then Minister of Economy) and IAPI"II.
Once the war finished, the U.S.A. maintained an embargo on arms sales to Argentina from potential European as well as U.S. suppliers (The State Department was still adhering to the "hard-line" policy of former Ambassador Spruille Braden). This policy delayed, among other things, the Rio Conference, in which the Inter-American Treaty for Reciprocal Assistance (IATRA) was signed. 12 Meanwhile the Peron administration was committed to reequipping the Army within the framework of the hemispheric defense pact anticipated by the Chapultepec II See Robert Potash: The Army and Politics in Argentina (1945-62); From Peron to Frondizi; op.cit., p. 63. ' agreement and to the standardization programme for weapons, training and organization recommended by the Inter-American Defense Board. On the other hand, Argentina opened negotiations with British firms looking forward to the purchase of 100 Meteor Jet fighters and some Lincoln bombers. "The total value of the aircraft and naval vessels ordered from Great Britain was reportedly about 20 000 000 sterling pounds,'13. " Nationalistic Army elements, on the other hand, unhappy with the measures insisted upon by the United States to compose relations, were presumably urging the purchase of weapons elsewhere. In the face of the continued embargo, even War Minister Sosa Molina apparently sought a reconsideration of the policy that precluded major purchases from European suppliers such as Skoda. "14 The standardization programme, was accepted provided that it did not become an obstacle to domestic arms production.
In 1942-47 at least two key factories for industrial development were created: Altos Homos Zapla (1943) and Fabrica Militar de Tolueno Sintetico. Some of these factories produced goods for civilian purposes (e.g. FM Cartuchos "San Francisco"). The interrelation between military and civilian heavy/light industries is a crucial factor in the process of industrial development in Argentina (See Diagram 1). With regard to arms imports: "As of April 30, 1949, Argentina had acquired at cost from the U.S. government 1.4 million dollars worth of military equipment under U.S. Public Resolution 83 and an additional 6.8 million dollars worth of equipment at the surplus property price of 748000 doliars.,,15 Further, important military equipment, particularly excess defense articles, was acquired in Europe in that period.
Argentina was excluded from the assistance of lend-lease during the Second World War, because of her neutnility. Meanwhile, Brazil increased its military strength and capabilities thanks to U.S. aid. However, the post-war economic boom made it possible for Argentina to substantially increase her military expenditures, which rose from 3.51 millions of New Pesos in 1942 to 10.78 millions of New Pesos in 1945 (See Table 1).
This permitted her to increase the material power of the armed forces, by modernizing their equipment and intallations (e.g. massive acquisitions of civilian and military equipment in 1947-48 in the middle of the 1945-48 boom I6 ). These decisions, together with the storing of export-commodities waiting for higher world prices, were influenced by faulty military evaluation of the international situation: the expectation of a new conflict between the Great Powers.
As Table 1 shows, military spending rose in the last three years of the Justo government l7 (expressed in constant 1970 prices) reaching a peak of 906 millions of new pesos in the first year of the Ortiz administration -which goes from Feb. 20, 1938 to July 4, 1940 -with a setback in the next three years. During World War II military appropriations follow two different patterns: decreasing during Ortiz and the Military expenditures reached a peak in 1948 and then began to decline when Peron's expansive economic policies faced the first difficulties, in 1949. Table 1 shows a consistent pattern of growth of milex (data deflated using the Cost of Living Index) during 1946-48, and a sharp decline in 1949.
Diaz Alejandro presents data from Alexandres Ganz, which show that the real gross investment of the national government for defense purposes decreased during the Peron government (See Table 2).  Table 3). Table 4 shows that except for slight differences for particular years depending on what deflator one uses (e.g. for 1951) military expenditures were very erratic until the fall of Peron in 1955.
A possible explanation for this erratic pattern is the existence of postwar stop-go cycles, which have been described as follows: "The exchange bottlenecks breaking Argentina's growth since 1949 has done so, not in a smooth and steady manner, but via severe exchange crisis bccuring every three or four years" (Lack of reliable GDP quarterly data makes precise dating of the cycles difficult)"20.
These cycles may be summarized as follows: 1) Drastic fall of foreign exchange reserves and deterioration of the external terms of trade; 2) The government's decision to cut imports severely and raise prices paid to farmers with, however, little apparent effect in stimulating agricultural output; 3) Inflationary pressures (development of a wage-price spiral) -followed by the adoption of a wage freeze and of deflationary measures which produce, among other things, a drastic fall in manufacturing production; 4) Relaxing of those measures, granting of large wage increases, production recovery, at the expense of a new balance of payments crisis. Fall of foreign exchange 19" Argentina remains a puzzle. Why is its military spending pattern so erratic?" (   As Table 3 shows, notwithstanding its erratic pattern of growth milex increasedin the long term -together with inflation although milex was not the only source of inflationary pressures (See below). As Table 5 shows, the persistent rise of the price level has also been erratic by whatever index one uses. This phenomenon strongly suggests that inflationary pressures have arisen primarily from cost-push elements and/or sectorial imbalances, rather than demand-pull forces"21.
Military expenditure has played a role in the emergence and dynamics of these costpush elements and/or sectorial imbalances, although it is very difficult to determine, without resorting to regression analysis, the exact weight of such an influence.
One may assume that "military expenditure acts most directly on the economy as an item of public expenditure and as an item of public expenditure it is potentially inflationary, although various economic measures can be taken or at least attempted to mitigate this effect"22. Tables 1 and 3   The total constitutes Total Public Expenditures. In this report, the Defense/Public Expenditure ratio is calculated using these actual expenditure data, as provided by Superintendencia del Tesoro and Secretaria de Hacienda (Memorias). This breakdown, however, must be distinguished from the jurisdictional one, in which the Ministry of Defense is usually allotted a higher percentage than Defense as an end in itself(Finalidad Defensa).
It has been said that the decreasing allocation of funds to military purposes during the Peron era was one of the main sources of discontent in the armed forces. The tables show that military expenditure as a percentage of public expenditure reached a peak in 1945 (the year before Peron took office) and then persistently declined until 1950; rising in the years 1950-1952 and declining again in 1952-1955 though less sharply than in 1945-1950 24 . On the other hand, the higher rates of inflation, by whatever index one uses, correspond to the years 1949-52 (See Table 5); and military expenditure actually rose in the years 1950-52 at least according to three of our four time-series of actual milex at constant 1970 prices (See Table 3). It may be assumed -by way of hypothesis -that military expenditure played a role -as a portion of public expenditure -in the persistent rise of the price level at least during 1950-52 25 , although inflation was also caused by stock and import price increases, which provoked important wage increases 26 .
The policy of freezing wages and prices initiated in February 1952 together with other measures tending to restrict demand resulted in a drastic fall of the rate of inflation in 1953 (See Table 5) and, after an excellent harvest and better balance of payments conditions in the same year, imports were allowed to go up in 1954 and 1955. After September 1953 credit policies were relaxed and when the collective contracts signed in 1952 were renewed in 1954 important wage increases were granted.
The rise in demand and in imports resulted in output and employment increases in 1954 and 1955. This development helped to put the brake on inflation; in both years the cost·of living rose by less than 10 percent-a-year, while between 1949-52, when demand was stagnant or decreasing, the cost of living rose at about 50 percent-a-year. 27 24 As far as service shares are concerned, army shares were higher during the war than afterwards. During 1946-55 average service shares were as follows: Army  Table 5. This confirms that the excess of demand is not a major source of inflation in Argentina although military expenditure as an item of public expenditure is potentially inflationary via supply-and-demand imbalances within the public sector. It should be noted that -as a source of inflation -"excess of demand" does not necessarily refer to an imbalance between supply-and-demand within the public sector, but to an imbalance between aggregate supply-anddemand. In other words, inflation can be generated through both excess of demand through the public sec-The second Five-Year Plan was issued in December 1952. "Top priority was now to be given to the development of the agrarian sector, energy resouces, and mining and heavy industries, followed by improving the infrastructure (transportation, highways, sewer and water works). Of a projected 33.5 billion pesos to be spent over the fiveyear period, 42 percent was to go into public works and services and 33 percent into economic promotion activity with only 4 percent into social action. The remainder was to be distributed between the military (4 billion, or 12 percent of the total) and contributions to provincial plans (3 billion, or 9 percent). The largest single areas of projected investment were transportation (5 billion), fuels (4.6 billion), highways (3.5 billion), and electric energy (2.5 billion)28.
Argentina is one of the countries with a decline in defense burden (milex/ODP ratio) during 1950-65 in Benoit's sample 29 • However, to start the analysis in 1950 is arbitrary and misleading since the Peronist period must be studied as a whole. Tables 6 and 7 present the milex/GDP ratio for a longer period: 1935-1981. As can be seen, the average defense burden for 1935-1949 (3.32 percent) is higher than the average defense burden for 1950-1981 (2.24 percent) (See Table 8).
Authors agree that there was a deliberate attempt to control the armed forces on the part of Peron though it seems to me exaggerated to talk about a "peronization" of the army in that period 30 • Table 7 Argentina: Defense Burden, 1950-1981Year 195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119731974197519761977197819791980   Budgetary allocations were also influenced by foreign policy considerations 31 . Argentina adopted an independent foreign policy in the post-war period: she was the Great Absentee at the Chapultepec Conference (March 1945) which had established an interim defensive alliance for the duration of the war, and she was "L'enfant terrible" at the Rio Conference (August 1947) which sanctioned the Inter-American Treaty for Reciprocal Assistance.
In Rio de Janeiro, Argentina was able to considerably weaken the U.S. desire of an all-inclusive military alliance: o Argentina wanted the economic question to be addressed at Rio. She lost, but was able to force the U.S. to consider it at Bogota. "32 During the 1952 economic crisis Army Secretary Gen. Lucero designed a policy aimed at reducing the defense burden through the exploitation of land owned by the Army (autoabastecimiento agropecuarioj33.
"This program had its origins in the idea that the Army, with the vast acres of land that it owned, could produce its own requirements for food and forage, and thus reduce its demands on the public budget." 31  As early as 1951, General Lucero had committed himself enthusiastically to this goal, directing unit commanders throughout the country to organize and set up farms, making official inspections of such establishments, and eventually creating an overall command to administer the entire nationwide operation" . 34 In spite of its "economic logic" the program was one of the main motives of discontent in the Army, according to Robert Potash.
The sharp increase in 1956 dismisses the hypothesis that governments that are brought into power through military coups (like the "Liberating Revolution" in September 1955) do not increase governmental allocations to the defense function 35 • As for the milex/public expenditure ratio, it also increased in 1956 (the year in which the orthodox Plan Prebisch began to be implemented) declining slightly in 1957 and sharply in 1958. The defense burden also rose in the first year of the military government and then declined following the milex/public expenditure pattern (see Table   7).
Military expenditure may have exerted inflationary pressures in 1956 (whole-sale prices and GNP implicit prices rose threefold in that year, see above, but not in 1957-1958. Our four deflators show milex declines in 1957-1958 and, although whole-sale prices and GNP implicit prices also declined in 1957, they rose again in 1958 (See table 5). At least, it can be said that the rate of inflation is as erratic as the rate of growth of military expenditure.
After 1955 interservice rivalry arose from differing approaches to the problem of Peronism. After Peron's fall in September 1955, the Argentine armed forces were divided in two fractions: peronists and anti-peronists. The first were all passed into retirement or executed, as Gen. Valle in June 1956. The second, took over the government, proscribed the Peronist Party and failed in their attempted pseudo-democratic "ways-out" in 1958 and 1963.
Between As table 9 shows, annual percentage changes by service branches during the "Liberating Revolution" were as follows (percentage changes from previous year): Year The Army's slightly higher share of the military budget corresponded to its major political role in the post-Peronist era.
As far as the military are concerned, Frondizi finally opted for a policy of not interfering with them, endorsing their budgetary requests: "the apparent premise of his military policy, at least in the early months of the administration, was that the bulk of the officer corps were supporters of constitutional government and that the way to strengthen that support while isolating the diehard opponents was to respect the autonomy of the armed forces. Recalling perhaps the unfortunate consequences of President Yrigoyen's military medling, Frondizi decided to follow an opposite course, not interfering with his military ministers, endorsing their budgetary requests, and giving them a free hand in personnel decisions". 36 Yet he faced a very complex" military problem". His presidency was characterized by a great number of military planteos (sets of demands)37. Finally, he was overthrown in March, 1962.
The pattern of change of military expenditure during the Frondizi period is a puzzle. The National Whole-Sale Price Index and the GDP Implicit Prices show a very similar pattern of erratic growth, with a more or less pronounced decline in 1959which fits with the reduction of public expenditure and budgetary deficits usually prescribed by the IMF -and then a sharp increase until 1961 and even 1962 in the case of the GDP deflator (See table 3). The rise starts one year earlier -in 1958in the case of the GC deflator 38 .
On the other hand, military expenditure rose -as a percent of public expenditure -from 1958 until 1960 (See table 3). The defense burden also rose slightly until the fall of Frondizi in 1962 (  * As an independent service branch, the Air Force was created in 1945. Tables I and 3.

Sources: As in
The great number of coups attempts 39 and the sharpening of interservice rivalry characterized the Frondizi administration. The Navy, for example, adamantly opposed the idea of creating the post of Minister of Defense," fearful that the Defense Ministry in the hands of a general would result in the Navy's loss of independence 40 .
Moreover, interservice rivalry became more virulent between 1958 and 1963: "Unti11955 the Navy's role in politics was a minor one. That year, with the Army divided, the Navy's solidly anti-Peronist officer corps brought in the fleet to turn the balance of power in September's successful revolt against Peron. The Navy gained enormous prestige and the Vice-Presidency, which went to Admiral Isaac F Rojas." "The latecomer Air Force has had less chance to build a tradition of political action. It gained prestige through the adhesion of important sectors to the successful Azul revolt of September 1962, but it lost some of this when its Commander in Chief, Brigadier Cayo Alvarez undertook an ill-starred, one-man rebellion the following December. Thus far, the Air Force has not been the successful initiator of politicalmilitary action; the evidence tentatively suggests that its officers have been somewhat more concerned with balance-of-power considerations vis-a-vis the other services than with "ideological alignments".
"It is the more numerous and historically more "interventionist" Army that has provided the bulk of the military forays into political action. And it is the Army that has produced the jungle of fissioning factions and cliques of recent years,,41.
This phenomenon is closely connected with the social and political environment: "The Argentine military is not monolithic, nor is it a caste. The notion of the Army as a caste implies that the military is an autonomous stratum acting in terms of a selfgenerated interest. In reality, the military is linked at many points to a variety of social and political groups and is particularly responsive to its social enviroment" .42 The politicization of the three services 43 is outstanding in this period 44 . Particularly the Air Force became an important political force, while slightly increasing the share of total military appropriations: 39 The Cuban problem was a key policy-issue during the Frondizi administration, and a constant source of military demands (planteos) cf. Robert Potash, op.cit., pp. 343-350. "While the armed forces' leaders saw the Cuban problem essentially as a military threat to be countered by collectively endorsed sanctions, including Cuba's expUlsion from the inter-American system, Frondizi saw the problem in a different light. To him, the real issue confronting the nations assembled at the Punta del Este Conference was not Castro, but attacking the problems of underdevelopment". ( Table 3), reflecting a very difficult economic situation (negative annual rates of growth of real GDP factor costs in 1962 and 1963). In order to deal with the 1962 -63 economic crisis, the government signed agreements with the IMF stabilization programs, the belief in the mechanism of prices and the adoption of a restrictive monetary fiscal policy would lead to internal prices stability and a more relaxed situation in the foreign accounts 46 .
The economic crisis coincided with the fall of President Frondizi in March 1962 and the Azul vs. Colorado conflict in 1962/63 47 .
During the Frondizi government the military as an institution -and in spite of interservice rivalry and the Azules-Colorados struggle -reinforced their position at the "epicentreof power". The distinction between azulesl(legalists) and "colorados" dates from 1955. Both were anti-peronist, but "in a different way"48': 1) The Colorados did not make any distinction: peronism as such was a class movement opening the doors to communism; 2) The Azules, instead, wanted to rescue the "good" peronists and to proscribe the "bad" ones (that is, those loyal to Peron). But the fundamental fact is that both sec-45 It has been said that there is "a tight, highly significant relationship between total and per capita GDP and total and per capita domestic defense expenditure" (cf. tors were anti-peronists. Besides, as Rouquie points out, the Azuleswho finally won the 1962 -63 mini-civil war -were mainly "professionalists" (Rouquie speaks of a "professional anti-peronism") and as such permitted the "institutional continuity" though remaining at the epicentre of power and proscribing the Peronist Party in the July 1963 elections.
Although the economic situation improved a bit in 1960 -61, due mainly to foreign investment in heavy industry (e.g. oil and petrochemicals) as above mentioned, the situation in the foreign accounts worsened during 1958 -63.
The first year of civilian government (Dr. Illia was elected in July 7, 1963) witnesses a significant increase in the rate of growth of GDP (1963: 4.6 0/0; 1964 8.5 %)49 after the economic recession and politico-military struggles in 1962 -63. Real GDP at factor costs rose by about 8.6 % in 1965 while in 1966 real milex rose significantly, by whatever deflator one uses (See above, Table 3). This seems to confirm Schmitter's hypothesis that output increases give the means for a rise in military appropriations, but with one-year lag.
Significantly, the defense burden went down in the first two years of Dr. Illia's civilian administration (See Table 7 Illia's Army Commander-in-Chief was Gen. Ongania, the leader of the Azules, professionalist fraction within the armed forces. Ongania represented both the reinforcement of the Argentine armed forces' integration within the Pentagon-controlled Inter-American Defense System 51 and the ideologue of "national security doctrine,,52in the sense of "internal war against communism" -in domestic affairs. The pattern of growth of military expenditure during Illia may be sumarized as follows:     Tables 3 and 9. Data deflated by using the GOP implicit prices. Sources: (  1979,1980 and 1981 only introduce minor changes: "Real" instead of "Physical" investment; "Investment on Pre-existing Goods" as a new category and aportaciones de capital y prestamos as a sub-category of Financial Investment. Arms purchases is a subcategory of supply of equipment, equipamiento, which is a subcategory of Capital Goods (Inversion Real-Bienes de Capital).
If one uses the GDP deflator military spending went suddenly down in 1963 and this affected service shares: only Air Force expenditures slightly rose between 1962 and 1963. However, the Army and the Navy recovered their previous levels before the Air Force.
Noteworthy features of the coup included the following: 1) It was a "clean" coup and swiftly executed; without shots, government resistance or a state of siege; 2) Compared with previous Argentine coups, the formal attributes claimed by the June 28 movement were pretentious and the institutional changes were drastic (it was an "institutional" coup d'etat). The term bureaucratic-authoritarianism has been used to refer to this new type of political system 54 .
3) A classic military-junta composed of the commanders of the three services executed the coup, decreed the Statute of the Revolution, and "elected" Lieutenant General Juan Carlos Ongania president. In contrast to previous coups, however, this junta was to dissolve itself within twenty-four hours, in accordance with a "basic plan" for the "Revolution" and the well-known insistence of Ongania that the military not dissipate its unity and professionalization through prolonged political involvement. 55 However, from 1966 onwards the "junta level"56 was a basic feature of military    Table 3) while the defence burden was very uniform (See Table 7). Military spending reached a peak in 1969 and then declined more or less pronouncedly.
The first serious attempt at defence planning in Argentina was made during the Ongania administration. The-relationship between security and development was a key element of the government's ideology. In this connection, the National Security Council (Consejo Nacional de Seguridad, CONASE) was supposed to collaborate with the National Council for Development (Consejo Nacional de Desarrollo, CO-NADE).
In the words of Alain Rouquie, the concept of " national defence" served to legitimate, during Ongania "le maintient d'un Etat d'exception a domination militaire,,57. The laws of national defence and civilian service for defence, servicio civil de dejensa, issued in that context, implied the hypertrophy of the concept of "security" and the militarization of civilian life.

The interrelation between security and development was emphasized by President
Ongania at the Conference of Presidents in Punta del Este: "In the same was as we need security to reach development, we would then benefit from development in order to preserve our security." The need to achieve industrial independence in order to ensure national defence was always an important goal for the armed forces: "In March 1964 ... Gen. Juan E Guglialmelli, Director of the Superior War School, suggested that 'a third way' between political intromission and professional abstention could be found in the notion of the Army at the service of economic development"58.      At the VUth Conference of American Armies, the Argentine delgation maintained that "security is Utopia without development, both at the national and international levels" 59 .
Ten years later, under the influence of French military thought which had ascendancy over the Army during the "Europe Plan", "security", in the sense of antisubversive war, replaced "development" as a fundamental goal for the military establishment although "security" and "development" are still closely linked in the military's thought 60 .
The   Tables I, 3 and 9. Data deflated by the Consumer-Price Index.

The emergence oj a military-industrial complex
Early in 1967 the "Europe Plan" was aimed at emancipating the country from U.S. military aid 64 . The plan arose to offset Army discontent with regard to the Military Assistance Treaty signed with the U.S.A. in 1964 as part of the U.S. Military Assistance Program (M.A.P.), and was aimed at reaching "complete self suffiency" in order to put Argentina in the road of "complete sovereignty".
The three fundamental goals of the Plan were: 1) Ensuring the permanent supply of equipment; 2) developing domestic arms production; 3) Improvip.g Argentina's arms exports capacity. According to Gen. Uriburu, the plan ws scheduled for a 9-year period and valued at about 80 million dollars 65 . The press first reported that, in the words of Gen. Uriburu, 23 contracts had been signed with French industrial firms in 1968. However, the day after Gen. Uriburu rectified his previous statement, saying that an important part of the 23 contracts had been made with local firms, including state-owned enterprises, while others were with European -not only French -industries; that the contracts contained clauses on the transfer of royalties and that some communication equipment would be purchased in the U.S.A.66.
Two outstanding features of the Europe Plan were the interlocking between Argentine entrepreneurs and the military establishment on one hand and the "training effects" on the other: Argentine military personnel were sent to France and the French mission became the most important foreign military mission in Buenos Aires.
The Plan was then scheduled until 1974, assigning an important role to private firms, most of them branches of big European corporations: "The industrial core of the Europe Plan is Astillero Rio de la Plata, ASTARSA, where coal-ships and gold-storage ships are constructed. Since 1967 an important share-holder of ASTARSA was Societe des Forges et Ateliers du Creusot (Groupe Schneider-Banque Union Europeene Industrielle et Financiere). The French planned to involve this troubled enterprise in arms production ( ... ). Not surprisingly, the French big capital decide to invest in that area, in the same way as Renault decided to invest in one of the largest plants of the automobile industry in Latin America: IKA-Renault in the province of Cordoba 67 .
The other European based firms involved with the construction of the French tank were: "The future manufactures of engines and propeller-shafts, IKA-Renault (French) and Fiat-Concord (Italian) respectively; Philips Argentina (Dutch), standard Electric (U.S.) and Siemens Argentina (German) for the manufacturing of high-technology radioelectric and telephonic systems whose national shares go from 35.6 070 to 100 %; Mercedes Benz Argentina (German) for the manufacturing of military trucks, "todo terreno", the General Directorate for Military Factories (DGFM) for the supply of artillery to be manufactured in Rio Tercero, Cordoba, and different types of ammunition to be manufactured in Rio Tercero and San Lorenzo, (Santa Fe) as well as tens of minor Argentine contractors and sub-contractors who will collaborate with the Plan"68.
"This understanding, I would even say, "ensemble" between industrialists and military officers is a major feature of national defense in modern countries ( ... ). Entrepreneurs and military men must support and promote scientific and technological research if they want to be in tune with the pace of the century"69.

Beginning in 1968, Argentina searched intensively for new suppliers in Europe.
According to press accounts, Gen. Uriburu visited Swiss and German factories in 1968: for example, the Spanish-Swiss factory, which manufactures machine-guns and canones de tiro rapido, de 20 y 30 milimetros, which supplies ammunition and airland missiles for combat aircraft. The Army was equipped with an anti-tank missile (directed by remote control through an electronic computer) produced by Bolkow, a West German-based firm 71 . The French tank, in turn, would be assembled in Argentina and its components would be manufactured by the Argentine automobile industry.
The "Europe Plan" also intended to reduce the opportunity costs of defense by way of the transfer of technology from military to civilian industries, taking advantage of the industrial military complex already installed (Argentine military factories were created in the 1930s and 1940s.).
Some researchers are critical as to the existence of "spin off" effects (i.e. the possibility of the transfer of technology from "military" to "civil" industry) in less developed countries. (Others are critical as to the existence of spin-off in any country).
As for the more advanced countries of Latin America (Argentina, Brazil) the problem must be discussed taking into account the specificities of Latin American dependent development. Roughly speaking, the Latin American countries' model of development 72 was based on agricultural exports from the XIX century and during the three first decades of this century. During the thirties and 1940s, importsubstituting industrialization and the rise of "populist" regimes and finally in the 1950s "industrialized underdevelopment,,73 characterized by increasing foreign investment (Brazil, Argentina) and the emergence of multinational corporations in the process of "internationalization of the internal market".
During import-substituting industrialization the military played a key role in the emergence of a modern public sector, particularly in Chile, Argentina and Brazil. The structural situation of dependence and the conditions of underdevelopment in which industrialization took place inhibited the private sector from undertaking this task 74. goods; signed contracts with private firms and formed mixed societies with the private sector.
To sum up, as in Brazil 75 the State -particularly the military -played a key role in the process of import-substituting industrialization, undertaking the setting up of key industries for economic development. For example, an iron and steel industry and other heavy manufacturing industries could only be installed with the involvement of the military. On this point there is general agreement among scholars in Argentina and it is admitted even by the most severe ciritics of the military establishment.
On the other hand, the possible existence of spin-of/is reinforced by the similarities between Argentina and other countries of recent settlement1 6 in which "heavy investment in the defense sector and, 'in particular in those industries producing military requirements, has been partially justified in terms of the existence of "spin-off,,77 It should not be surprising, therefore, that since arms purchases are expensive, "for a country which has attained a fair degree of industrialization, as Argentina has, the economic costs of local production might not be prohibitive. This was realized by the Argentine military leadership, i.e. Peron and other nationalist officers, early in the 1940s during World War II in view of the foreign exchange savings and the boost given to sectoral development by military/civil composite demand. Indeed, a study undertaken by Kennedy appears to support this view, for he concludes: "There is no evidence that domestic military production wastes resources or holds back growth of the manufacturing sector. .. The defense sector is associated with and integrated into the metal and engineering sector, and there appears to be some positive association between the expansion of both sectors"78.

Military Expenditure and Other Economic Variables during 1970-73
Military expenditure as a percent of public expenditure decreased during the Levingston-Lanusse interregnum (1970-73). International reserves declined in 1971 and then sharply increased in 1972 and 1973 as well as arms imports (See Table 20 76 "Although at 1960 prices, distorted by greater post-war protection, the share of manufacturing value added is nearly twice that of the rural sector for 1963-65, when measured at 1937 prices both are roughly equal. Expressed at 1960 prices, the Argentine manufacturing share in GOP is higher than that of the United States for 1963-65!" ( By 1969 the U.S. attempted to recover the monopoly of arms sales to Argentina. In that connection, Gen. Chester L Johnson, commander of the SOUTH COM, was sent to Buenos Aires: "Gen. Johnson's trip is a new and decided attempt to persuade Argentines that arms imports from Europe must be phased out. In exhange, Argentina would be eligible to U.S. foreign military sales credits at convenient conditions and low prices" 80.
According to press accounts, based on "responsible sources" 53 armoured transports were ordered from the U.S. in 1972: "The acquisition was made through the Army General Staff and involves an important deal with the U.S., suggesting that the Europe Plan has been post-poned". 81 Important  On the other hand, arms imports rose sharply in 1972 (See Table 20) representing 3.1 percent of the total value of imports (same table). Accordingly, the capital expenditure portion of defense expenditures rose by 34 percent in 1971 and by 14 percent in 1972, decreasing together with arms imports in 1973:    Tables 3 and 24).
As Table 26 shows, military expenditure increases are associated with output increases; but with a one-year time-lag: Until his death on July 1, 1974, Peron played a very important role in the sociopolitical process, being the unifying element in a political party as heterogeneous as the Peronist Party85. Besides, Peron was a "military-politician" who took advantage of his military condition, as Justo did, in the 1930s., in order to professionalize the armed forces. The process entailed, as we have seen, significant increases in the military share of the budgetary pie.
On May 25, 1973, the military withdrew from the political scene. A few weeks later, on the occasion of the Peron-Campora crisis, the military intervened again in politics, as a result of the "Carcagno-Peron" meeting in which were discussed not only Peron's military status but also violence within the Peronist movement, joreign policy -considered excessively aggressive by the military -and economic policy. The pact between Peron and the armed forces 86 paved the way for a "constitutional" coup d'etat in July 13, 1973. The military would not raise any objection to the leaving of Campora provided that constitutional rules would be respected. However, the overthrow of Campora was the beginning of an increasing deterioration of the bourgeoisdemocratic legality, until the September-October 1974 crisis when the "state of emergency" favoured by Peron was definitely established.
After July, the armed forces gave their opinfon on important foreign policy and economic issues. However, they were only a "pressure group" like many others trying to exert influence upon Peron.
Shortly after taking office in May 1973, the Campora administration made important changes in the Army (Nine major generals were forced into retirement). From May to December 1973, under General Carcagno's command, the Army was somewhat politicized, though not directly engaged with the civilian government. In these months the Army collaborated with the Peronist Youth in the so-called Operativo Dorrego, in the Province of Buenos Aires.
Gen. Carcagno was dimissed as soon as Peron assumed the Presidency in October 1973 being replaced by General Anaya 87 , who made an attempt to professionalize the Army. On May 1975 Gen. Alberto Numa Laplane replaced Gen. Anaya, proclaiming the concept of "integrated professionalism", projesionalismo integrado, against the concept of "aseptic professionalism", projesionalismo aseptico 88 .
85 Since Peron was exiled in 1955, the distinction between "Peronism as a party" and a larger "Peronist Movement" became frequent in the sociopolitical literature. 86 For a good analysis of the secret goings-on during the 12-13 July crisis, see the interesting articles by Ramiro de Casabellas in "La Opinion", Buenos Aires: "Antecedents de las 48 horas que modificaron un gobierno. El pacto de Peron resucito un esquema politico que antes parecia hipotetico"; 18 July 1973, p. 10. Casabellas makes reference to the "Gran Acuerdo Nacional" (GAN) promoted by President Lanusse at the stage prior to the 1973 election.
87 Lieut.Gen. Carcagno was named commander-in-chiefby President Campora, after cutting off the top of the "Lanussist" Army in May 1973. Peron came back to Argentina on 20 June 1973, putting an end to 18 years of exile in Spain. The violent confrontations at Ezeiza airport, the day of his arrival, preannounced the sort of right-wing repression which some people call "state terrorism".
88 "There is talk about 'aseptic professionalism' 'engaged' professionalism. The first is a sort of imaginary conception of the military profession, foreign to its national intrinsic character because conceived in that way it could be applied to any country. The second is nearer the truth, whenever it infers, at the institutional level, professional performance through experiencing the reality of the country ( ... ) (and) by attempting to do the best in its area, respecting the Constitution and the Law. At the individual level engaged professionalism means a great freedom of conscience, "esprit de corps" and respect for discipline, subordination and loyalty" (Speech by Gen. Alberto Numa Laplane, Army commander in-chief, in the Day of the Army (29 May 1975). (See "La Nacion"; 30 May 1975, p. 1.) However, as a result of the August 1975 crisis, Numa Laplane was forced into retirement, being replaced by General Videla -leader of the" aseptic professionalists" fraction -who led the ouster of Isabel Peron in March 1976 89 . (1976)(1977)(1978)(1979)(1980)(1981) During 1976-81 the above-mentioned upward trend continued (see Table 26). Particularly arms imports, partially justified in terms of the dispute with Chile over the Beagle Channel, rose sharply from 1978 (see Tables 20 and 24)90. As Table 3 shows, the increases began before the military took power in 1976; all the four deflators showing substantial increases between 1975 and 1977. As David K Whynes puts it, "On the basis of the fundamental assumptions of contemporary economic theory, the idea that the allocation of resources in favour of the military sector must increase after a coup has a certain intuitive appeal.

S. Military expenditures during the Military Government
In that men should prefer more economic goods to less, on being given the power to extract more they should naturally do so"91.
Milex uninterruptedly rose from 1972 if deflated by wholesale Prices, (See Table 3) suffering very minor setbacks in 1979 and 1980 if deflated by Consumer Prices (See Table 26) and a very small setback in 1980 if deflated by the GDP implicit prices.
The HGC deflator, which shows the sharpest increase (67.2070 in 1976) also shows the sharpest declines in 1978 and 1980 (See Tables 3 and 26). It should be noted that the defense burden rose from 1.66 percent in 1974 to 3.09 percent in 1981 (See Table   89 This part is based on on my paper" Political Processes with Military Parties: The Argentine Case" , presented at the Round   Table 3).
As for the functional breakdowm, Table 27 shows annual percentage changes of both current expenditure and capital expenditure since 1973. Particularly capital goods significantly rose between 1974 and 1977 92 .
As far as service shares are concerned, "defense non-discriminated" which represented 4 percent of all defense expenditures in 1974 rose to 9 percent in 1975, reaching a peak of 23 percent in 1977 (See Table 9)93.
Arms imports played an important role, together with the revaluation of the peso and tariff reductions, in the increase of the foreign debt after 1976. By 1979 it was estimated that arms imports accounted for approximately a third part of an outstanding 27 thousand million dollars foreign debt. Martinez de Hoz' policies of economic and financial opening implied a great deal of "enforced indebtness"94.
The economic policies implemented during the military administrations of Generals Videla (1976-81) and Viola (1981) led to an increasingly unmanageable socioeconomic crisis 95 whose social consequences, particularly unemployment are now widely recognized.
Although the declared objective of the program was "to go from an economy based on speculation towards one based on production" in practice Martinez de Hoz and his team did exactly the opposite, and today it is a common-place to say that the productive structure -constructed since import-substitution in the 1930s -was largely destroyed during 1976-81.  92 Arms purchases is a subcategory of supply of equipment, which is a subcategory of Capital Goods. 93 Arms purchases are budgeted under "defense non-discriminated", as "obligaciones a cargo del Tesoro". 94 See Aldo Ferrer: Repercusiones de la Apertura Financiera Externa y la Crisis (Segunda Nota). 2) EI Modelo de Apertura Finaciera Externa con Endeudamiento Forzado, in" Ambito Financiero"; Wednesday 21 October 1981; pp. 8-9. 95 An excellent analysis of the economic crisis appears in Aldo Ferrer: Nacionalismo y Orden Constitucional; Fondo de Cultura Econ6mica; Mexico;1981; chapter III: "EI Monetarismo en Argentina y Chile"; particularly pp.150 et ff.
The economic policy inaugurated in 1976 has been characterized as an important attempt to transform the scheme of functioning of the Argentine economy prevailing since 1930 96 • "The main strategy adopted by the economic team in order to set up a free market economy was the opening of the internal market to foreign competence' '97.
This was done in two stages: 1) From April 1976 to May 1978 the dominant policy instrument was the reduction of import-duties to make imports of industrial products competitive with local production. The first important reduction was made from November 1976 until the implementation of the tariff programme in December 1978. Import-duties for capital goods were eliminated and it was envisaged that importduties would gradually level-out until reaching an average 20 percent in 1984.
2)The re-valuation of the local currency (the new peso, el peso nuevo) measured in terms of its dollar parity. This process extended from May 1978 until December 1980.
The programme assigned priority to infrastructure and public investment, especially in the energy sector including hydroelectricity and nuclear energy.
As Aldo Ferrer points out, there is a contradiction between the strategy of shrinking the economy, and the policy of expanding the infrastructure which only makes sense when the economy is growing at a higher rate. According to Ferrer, "the contrast between a decreasing production of goods and the continuous expansion of infrastructure investments is a significant feature of current economic policies, reflecting, to so me extent, the inertia of state actions connected with decisions made before 1975 and some important goals for the military, like investment in infrastructure. This seems particularly clear in the case of nuclear energy and is consistent with a policy which, on the other hand, shrinks the local market, weakens the settlement of an immense territory and impedes industrial development" 98 . The analysis of the presentation of the budget laws during 1976-1981 shows that decisions on military spending are not made at random but rather as part of a deliberate policy of public spending 99 defense planning seeming more integrated with economic planning than in the past. This haS' not contributed, however, to economic growth or to improving the socio-economic conditions prevailing in Argentina.
On the other hand, arms purchases lOo are not included in the balance of merchandise trade and it is difficult to find them in the balance of payments, because only the money paid as "interests" (intereses) is recorded, corresponding to obligations higher than the ones recognized in the balance of payments (e.g. in 1980)101. Moreover, the loan is not recorded (foreign exchange required for ams imports should be recorded as "servicios reales y financieros".

Economic aid, military assistance, military training and advice to Argentina
Reflecting a tradition of independence from U.S. hemispheric leadership, Argentina did not accept the early Mutual Defense Assistance Agreements Negotiations (MDAA) and in fact did not sign one until 1964. 102 The agreement was labelled "Memorandum de Entendimiento" and was signed on May 10, 1964 as part of the Military Assistance Program (MAP).
Argentina was the first Latin American country which attempted to become independent from the U.S.A. as far as arms supplies are concerned (See above chapter 3, "The Europe Plan").
"When the military agreement expired at the end of 1966, it had only involved the re-equipment of some Army divisions (particularly with anti-subversive weapons) and the acquisition of radioelectric and wire materials, sets of tools, workshops, handbooks and training courses" 103.
"Moreover, in many cases very complicated materials were delivered, according to U.S. specifications for the equipment of U.S. units and without delivering the whole package of armaments. In other cases, unnecessary materials of difficult service were delivered. In addition to these technical aspects, the implementation of the MAP involved the acceptance of implicit and explicit requirements which provoked deep dissatisfaction within the officer corps" 104.
"The more resisted restrictions which were lately allerged in defense of the" Europe Plan "were: 1) The control exerted by the personnel of the U.S. mission with regard to the location of units, operational issues and the service of the supplied materials; 2) The conditions imposed to the use of the new equipment which was expressly assigned to internal security or for missions of importance for continental security; and 3) The logistical dependence arising from the delivery of complex equipment difficult to operate and expensive to mainiain.
Likewise, once the pact was implemented, defense policy-makers found that it implied acquisitions and investments which would only produce foreign exchange shortages and deficit in the foreign accounts with the U.S.A .. Moreover, it was an obstacle to the development of local arms production 105.
U.S. military aid to Argentina was first suspended in 1974, as a reaction against the Argentine commercial agreement with Cuba but it was soon resumed 111. On March 24, 1976, President Isabel Peron was overthrown in an "institutional" coup d'etat and replaced by General Jorge Rafael Videla, the Commander-in-chief of the Army and a member of a three-man military junta (representing the Army, Navy and Air Force) who has governed the country since then.
Violent repression as "state terrorism" followed the coup. Thousands  2) no credits (including participation in credits) may be extended and no loan may be gmrranteed under the Arms Export Control Act with respect to Argentina; 3) no sales of defense articles or services may be made under the Arms Export Control Act to Argentina and 4) no export licences may be issued under section 38 of the Arms Export Control Act to or for the Government of Argentina"(Sec.21O of Public Law 95-240 provides that any export licences referred to in this section which were "issued initially on or before September 30, 1978 may from time to time thereafter be renewed, reissued or modified (or in the evert of lapse of such licence, replacement licences may be issued), provided that any such renewal, reissuance or modification (or any such replacement licence) does not change significantly any such licence as initially issued 113.
As Table 46 shows, Argentina received a significant portion of all U.S. military assistance to Latin America, particularly loans (23.4 percent for the period 1962-76). However, economic assistance l14 to Argentina was insignificant over the same period when compared with other countries of Benoit's sample l15 . The picture is roughly the same for 1965-80. Moreover, Argentina has only received loan-aid. Grant-aid has been insignificant (less than 1 0/0) over the whole period.
The In summary, the data show that: 1) Argentina did not receive significant amounts of bilateral economic aid like India 116 , Israel and other Third World countries, helping them to maintain heavy defense burdens without dimishing their growth rates; 2) The defense burden on the Argentine economy was not a heavy one during 1950-75 (See Table 7); 3) The defense burden rose sharply during the military government (1976-1981) (See Table 32).
Between 1950 and 1965 Argentina shows a "medium" 117 defense burden having spent three times as much on defense as Mexico, in relation to GOP, notwithstanding the lack of any serious external security threat to Argentina in that period. According to Benoit, Argentina illustrates "a decline in defense expenditures with a medium defense burden" (p. 221). "Argentina is one of the countries in our sample which has had a fairly substantial decline in real defense expenditures (by more than I "70 per annum over the whole period of (his study) and in its defense burden as well (from 2.9 % to 1.7 %) (p. 261). In that connection, he assumes that excessive military expenditures are not the main reason why Argentina's growth rates are lower than those of other industrialized Third World countries (e.g. Mexico) although he recognizes that ·"a more austere defense program might still make a useful contribution" (p. 263).
In accordance with the important role assigned by the military government to public and infrastructure investment, particularly hydroelectricity and nuclear energy, Argentina received an important flow of assistance from international agencies after 1977.
An investment of approximately 48 thousand million pesos was made in 1978 for the construction of the Yacireta dam. Moreover 227 thousand million pesos were invested in the construction of the Saito Grande hydroelectrical complex (which has not yet been finished)119.
On the other hand, important resources have been devoted to energy supplies, particularly oil, including the setting up of about 700 new oil fields in 1978 (state and privately-owned).
An important role has been assigned to private activity, according to the philosophy of the "process".
The country produces about 90 070 of its oil needs and will be self-sufficient in 1982 120 • The policy of public investments, on the other hand, has been implemented within the framework of a programme of privatizaciones which also includes national defense: "The State should only keep control of those military factories producing weapons immediately applicable to military operations or supplying essential public services which are not attractive to private enterprises" 121 .
The implementation of the principle that "private enterprises are more efficient than state-owned enterprises" gave place to vigorous polemics in 1980 about the possible privatization of some enterprises owned by the General Directorate jor Military Factories (Direccion General de Fabricaciones Militares, DGFM}. According to pressaccounts, the project was resisted within the Army. However, the possible transfer to private firms of some military factories was admitted by the head of Fabricaciones Militares, Gen. Oscar Gallino, who said that the policy of privatizaciones might embrace activities in the fields of mining, petrochemicals, chemicals, machine industry and iron & steel all of which are now controlled by Fabricaciones Militares. The size of state-owned enterprises may be reduced by increasing orders to the private sector as has been planned for some components of the TAM's engine (TAM: Tanque Argentino Mediano) or in the supply of steel tubes, aluminium and plastic components for the production of missiles. Even the military-industrial phase might be open to local or foreign private firms: "One may have activities totally assigned to the private sector or associations with other state-owned enterprises" 122.
119 The whole complex is known as the Yacireta-Salto Grande. 120 About 900 oil fields were to be perforated in 1981, 550 by state-owned YPF (Yacimentos Petroliferos Fiscales) and the rest by private enterprises. 121 Public Law No. 22451, Presupuesto General de la Administracion Nacional para el Ejercicio del Ano 1981; Mensaje de Ley, p. XLV. "The main purpose of the process of privatizaciones is to optimize the allocation of resources between the public and private sectors, on grounds that private enterprises are more efficient than state-owned enterprises" (ibid., pp. XLV, XLVI).   in 1965) where "the rise in defense expenditures was thus a necessary condition, and partial cause of the additional aid, and of the growth benefits of that aid l23 .
None of these things were experienced by Argentina: neither sharp military expenditure increases nor massive flows of external aid and Argentina never experienced a sharp upturn in the growth rate like India after 1962.
Benoit's restrained definition of foreign aid is somewhat arbitrary. A more comprehensive definition should include not only bilateral economic aid but also multi. lateral economic aid and foreign private investment l24 • One may suspect, in this connection, that both military aid and the flows of foreign investment, particularly petroleum and petrochemicals during the Frondizi administration (1958)(1959)(1960)(1961)(1962) played an important role in maintaining an annual average growth rate of 4.4 % until 1974. Even more, notwithstanding the recession of 1980-81 and the lack of economic growth in the period 1976-1981 (See Table 33   As tables 34 and 36 show, Argentina is a typical also with regard to the foreign resources variable and its influence on the relationship "defense burden-economic growth". Thus, between 1951 and 1965 Argentina's bilateral economic aid receipts represented only 0.012 % of her GNP, against 0.53 % (Brazil); 0.83 % (Chile); and 0.21 % (Peru).
On the other hand, Argentina's total net inflow of all external resources was higher than that of Chile and Peru, but much lower than that of Brazil (See table 35 table 7). Some of the conclusions of this report may be summarized as follows: 1) Argentina has kept showing a poor rate of economic growth and her socioeconomic and political problems have become more acute in recent years; 2) The pattern of growth of military expenditures is still jerky (See table 3 " As one might expect, fiscal and monetary contraction delayed economic recovery and reversed the trends towards recovery. By the end of 1977, GDP began to decline, and in the first quarter of 1978 it was 3.6 % and 5.5 % lower than in the same quarters 1977 and 1975 respectively. Industr'ial GDP declined over the periods by 12 % and 18 % respectively. All the indicators went down, Inventories fell rapidly and even exports declined due to a bad wheat harvest in 1977. The rate of unemployment rose only slightly from 2.2 % (October 1977) to 3.9 % (April 1978  according to all our deflators except Government Consumption (Tables 3 and 26). This may be related to the prospects of war with Chile.
Apart from a modest 4070 exports recovery, all the other indicators declined: e.g., consumption and private investment were at the same levels as in 1972 As table 7 shows, the defense burden goes up to 3.09 % in 1981, averaging 2.63 % for 1976-81 a higher percentage than in earlier years (e.g. 1.90 % in 1966-71). This upward trend contradicts Benoit's assumption that "overspending on defense is clearly not a major source of Argentina's growth problem". On the contrary, the data presented in this report suggest that defense expenditures now have a severely depressing effect. Even Benoit admitted that to adopt a Mexican level of defense burden might be advantageous for Argentina and one may assume that it would be more advantageous now than at the time when Benoit study was written (1971). 133   It is likely that in the Argentine case the interplay of the three" adverse growth ejjects oj dejense"136 has had an important role in the declining rate of growth of the Argentine economy in the last few years.
The investment ratio (calculated by dividing gross domestic investment, which is in reality a portion of GDP, by the current GDP) rose significantly from an average 19.21 % in 1950-74 to an average 25.7 % in 1975-80. Taking into account that "to the extent that defense increases involve increases in defense investmentthey compete  Table 37 presents the evolution of Physical Military Investment and Total Investment from 1950-80; showing how military physical investment rose, as a proportion of total investment, since 1975, reaching a 3.9 0.10 peak in 1977. 9) Given the rising trend of the Argentine defense burden (See table 7) the interplay of the three adverse growth effects above mentioned is propably stronger than in the past as well as the opportunity costs of the Argentine defense programme.
Although military expenditure is not mechanically associated with military coups in Argentina (i.e. high defense expenditures during the civilian government in 1973-1977 the main conclusion of this report is that military coups have accelerated the growth rate of military expenditures. Even when the erratic pattern of growth of military expenditure remains a puzzle, we found a positive answer to the "Post-Coup Military Spending question" at least for 1941-1981. Milex shot up after the 1943 coup; there was a high milex/public expenditure ratio during the Justo Presidency (1932-38) and milex rose sharply in the first year of the "Liberating Revolution" (1956) as well as during the last militarty government.
It may be maintained therefore, that higher military expenditures are more or less closely associated with military coups, having had a strong structural impact 139 (milex did not return to their pre-1974 levels), and having played an important role in both the rise of inflation and the negative growth rates of recent years (e.g. 1975, 1976, 1978; see table 26). To sum up, the Argentine case confirms the hypothesis that "since the military's share of the government pie is both an important symbol as well as a basic material resource for maintaining if not advancing such interests, it may be deduced that one way in which military rulers will behave differently is by giving higher budgetary priority to the state's defense function. As Whynes (1979, p.101) puts it "In that men should prefer more economic goods to less, on being given the power to extract more, they should naturally do so" 140.