Canada and the NORAD: Economics and Burden Sharing

We quantify the burden sharing between the United States and Canada within the context of the bi-lateral defense relationship regarding the North American Aerospace. Also known as the North American Aerospace Defense Command (NORAD), this bi-lateral military alliance has existed since the late 1950s. We use insights from the economic theory of military alliances as well as disaggregated defense expenditures on capital, labor and R & D to tease out nuanced assessment of burden sharing between the two countries and peer groups (Arctic Council). In addition, we provide some funding scenarios for the planned policy review in Canada to guide decision makers. We also show that there are considerable strategic, institutional, and operational constraints facing the fulfilment of Strong, Secure, Engaged (Defence Policy) and possible NORAD modernization. Improving these institutional issues, along with fulfilling the commitments outlined in the Defence Policy, will go a long way to assuaging the burden sharing debate.