1st Edition
The Economics of Defense Industry Contemporary Prospects and Challenges
This book on the economics of defence industry assesses a series of historical and contemporary case studies that consistently demonstrate the need for governments to recognise, and thereafter factor, the financial needs of a narrow industrial sector that is capital intensive, technologically advanced and that requires a highly skilled labour force.
Since the end of the cold war, Western governments have systematically reduced financial support to their domestic defence industry and have seemingly ignored planning and funding industrial mobilisation. In all cases, government policy has been to encourage industries to consolidate capacity to become financially viable in a sector that has seen diminished demand. The 2022 Russian invasion of Ukraine has caused Western governments to reassess their previous assumptions. Efforts to increase industrial capacity have been met with the iron laws of economics whereby businesses need to show return on investments. The chapters in this volume posit that efforts to rationalise industrial capacity and innovation to meet short-term financial efficiencies, inevitably results in limited, expensive, and long delays in increased production in times of international crisis.
This book serves as an essential guide for academics, researchers and students interested in defence economics, industrial economics, international relations, and industrial policy. The chapters in this book were originally published in various issues of Defense & Security Analysis.
Introduction—The economics of defense industry: contemporary prospects and challenges
Thomas-Durell Young
Part I: Historical perspectives
1. Defence procurement in perspective: what the history of the aircraft industry can tell us about UK defence procurement
Matthew Powell
2. Why the Turkish defense industry between 1919 and 1950 failed?
Uğur Ermiş and Günseli Gűműşel
3. The Czech defence and security industry: taking the pulse to an ailing man
Bohuslav Pernica
4. Defence industry in Iran: between needs and real capabilities
Robert Czulda
5. The decline of South Africa’s defence industry
Ron Matthews and Collin Koh
6. The Greek defence industry: from crisis to equilibrium
Spyridon Plakoudas
7. Addressing the “headwinds” faced by the European arms industry
Mitja Kleczkaa, Caroline Buts, and Marc Jegersa
Part II: Defence industrial policies and practices
8. Success and failures of the Gripen offsets in the Visegrad Group countries
Zsolt Lazar
9. Clustering in defence-related procurement: the case of a Belgian naval construction cluster
C. Peeters and R. Pilon
10. Make or buy? Explaining diverging frigate procurement approaches in Denmark and Norway
Michael Kluth
11. The challenges in buyer-supplier relationship for technological absorption capability in international defence acquisition: the case of Southeast Asia
Kogila Balakrishnan and Zsolt Lazar
Conclusion: The Economics of Defense Industry
Kogila Balakrishnan and Zsolt Lazar
Biography
Thomas-Durell Young is Senior Academic Advisor at President’s Office at the Defense Security Cooperation University, Washington, DC, USA. He is the Editor-in-Chief of Defense & Security Analysis. His latest book is Anatomy of Post-Communist European Defense Institutions: The Mirage of Military Modernity (2017).
