Powerful, Proximate and Potentially Threatening: Explaining Why States Arm and Project Power

States balance against potential threats, not power. Evaluating this claim requires measuring potential threat, yet we lack valid measures of this concept. Existing measures suffer from measurement error because they purposely exclude the impact of states that are not contiguous or major powers. We address this problem by developing a measure that considers the impact of all states on the level of potential threat that each country faces. The more economically powerful, geographic proximate, and incompatible other states’ interests are, the more potentially threatening they will be to a given country. We test the construct validity of our measure by evaluating its ability to identify the set of states a given country should find the most potentially threatening. We assess the measure’s predictive validity using new data that extend the estimates of military spending as a percentage of GDP back to 1816. We find our measure strongly predicts arming.