Defence inflation is a recurring factor in determining defence spending. It is widely reported in official government publications and in the trade press, but remains relatively neglected by defence and peace economists. In this book, international contributors from Finland, Norway, Sweden, the UK and the USA distinguish between defence inflation and cost escalation, and identify the causes of both. They use specific case studies to address a wide variety of theoretical and empirical issues and key questions, including the following: Does defence inflation affect all countries? What are its effects? Why does it occur? How (if at all) can defence inflation be controlled?
While most industry and trade press devote considerable ink and space to the discussion of defence inflation, cost escalation, and their consequential impact on the purchasing dollars of the armed forces, economists have been relatively silent. This book aims to rectify this oversight through a multinational survey and analysis of the topic, while also identifying the opportunities for further theoretical and empirical research in the field. This book was originally published as a special issue of the journal Defence and Peace Economics.
Table of Contents
1. Introduction: Defence Inflation Keith Hartley and Binyam Solomon 2. Defense Inflation: What has Happened, Why has it Happened, and What can be Done About it? Edward G. Keating and Mark V. Arena 3. UK Defence Inflation and Cost Escalation Keith Hartley 4. Investment Cost Escalation – An Overview of the Literature and Revised Estimates Kjetil Hove and Tobias Lillekvelland 5. Inflation Adjustments for Defense Acquisition Stanley A. Horowitz, Bruce R. Harmon and Daniel B. Levine 6. Defence-Specific Inflation – The Swedish Perspective Peter Nordlund 7. The Capability Factors as Explanatory Variables of Equipment Unit Cost Growth: A Methodological Proposal Juha-Matti Lehtonen and Jukka Anteroinen
Keith Hartley is an Emeritus Professor of Economics at the University of York, UK, where he was previously Professor of Economics, Director of the Institute for Research in the Social Sciences, and Director of the Centre for Defence Economics. He has advised the Parliamentary Defence Committee, the UN, the European Commission, the European Defence Agency, and various UK government departments. He was a founding editor of the journal Defence and Peace Economics, a NATO Research Fellow, and a QinetiQ Visiting Fellow.
Binyam Solomon is a senior defence scientist at Defence Research and Development Canada (DRDC) and an Adjunct Research Professor at Carleton University, Canada. He has published extensively on various quantitative and defence economics issues ranging from time series analysis and economic modelling to the defence industrial base, peacekeeping, and defence resources management.