Military spending briefly dipped in the early 1990s only to rebound by the end of the 20th century, yet policymakers and academics alike predicted a peace dividend if the cold war should end. What happened to this peace dividend? How do some countries actualize a peace dividend in a world that seems not to encourage one? Typically military spending is analyzed through lenses focusing on international politics, bureaucratic process, or domestic political economy. I argue that these three lenses have failed to account for some of the reasons military spending remains high in the post-cold war era. Utilizing sociological institutionalism and world models, I examine how the rules of the Washington consensus via the neo-liberal economic agenda and the national security exception promote high levels of military spending that the three main theories fail to recognize. This study particularly delves into the roles of states and transnational corporations in terms of competitiveness in the global political economy and privileges allotted to the military industry. My tests rely on fuzzy-set comparative qualitative analysis (fsQCA) as an innovative means for looking at necessary conditions as well as sufficient conjunctural causation through which countries can achieve a peace dividend in the post-cold war era.