Derek Braddon

The regional impact of defense expenditure

This chapter examines the current state of knowledge regarding the economic impact of defense expenditure at the level of the regional economy from a global perspective. Appropriate theoretical and analytical approaches are identified and selected case studies reviewed. The regional concentration of defense expenditure is explored using a variety of indicators and perceived differences in the economic impact of defense industry decline and military base contraction and closure are evaluated. The chapter considers relevant labor market issues and examines the different impacts to be expected in developing countries. Policy implications are explored in the context of the post-Cold War environment confronting the defense sector.

The matrix reloaded – what future for the defence firm?

Over the next few years, the matrix of firms which together comprise the international defence industry will undergo a dramatic transformation. A revolution is underway that will fundamentally reconfigure every aspect of the defence sector – military objectives and strategy; defence budgets; procurement policies; and technological advances associated with the move towards ‘network centric’ warfare. The impact of this strategic, financial and technical revolution is likely to result in a fundamental restructuring of the defence industrial base. The future of the defence firm in such a rapidly changing environment provides the focus for this special edition. It is important at the outset to recognize that the imminent revolution confronting the global defence industry follows a period during which that industry has already experienced significant change. First, with the sudden ‘outbreak of peace’ in the 1990s, the environment within which the industry has traditionally operated was transformed. The predictable nature of the Cold War world in which, despite cyclical adjustments to defence budgets, the existence of super-power threat and the consequent arms race virtually guaranteed firms in the industry a permanent long-run expansion in the defence budget, was shattered by the experience of almost continual budgetary contraction throughout the decade. Recent and modest renewed growth in defence expenditure in the United States, the UK and in some other nations is unlikely to represent a return to Cold War budgetary cycles and has much to do with a second stimulus driving change in the sector. The switch in the focus of military strategy from the doctrine of ‘mutually assured destruction’, applicable in the Cold War environment, to one concerned more with developing and maintaining a high level of preparedness for dealing with isolated but geo-politically significant regional conflicts made significant industrial restructuring unavoidable. The new strategy requires the development of ‘rapid response’ forces, equipped to carry out swift and

The UK defence electronics industry: adjusting to change

The electronics industry provides components and capabilities that are critical to modern defence requirements. It is anticipated that the effectiveness of both weapons systems and the command and control network that supports military operations will become increasingly dependent upon the electronics sub‐systems they employ in the future. With the ascendancy of ‘network centric warfare’, it seems certain that defence electronics will continue to grow in importance in the future, enabling far‐reaching advances in military capability and efficiency. Yet little is known about the structure, conduct, performance and competitiveness of the UK defence electronics sector as it prepares to meet the challenges ahead. This paper reports the findings of a study commissioned in 2002 by Intellect, the UK defence electronics trade association, and supported by the Department of Trade and Industry. The UK defence electronics industry is found to be a high technology, R&D‐intensive and decreasing cost industry, which is competitive in world defence markets. The UK industry faces major competitive threats in the future from established US and European firms and from potential new entrants from China, India, Israel, Singapore, South Korea and Turkey. The future competitiveness of the UK defence electronics industry will depend on maintaining both technical advantage and open access to the large US market.

Collaborative projects and the number of partner nations

Collaborative defence projects have been a distinctive feature of European defence industrial policy. This article focuses on whether the number of partner nations in international collaborative defence and aerospace programmes is a source of inefficiency. It appears that there is not a simple linear relationship. Two nation collaborations can be efficient, but conventional wisdom assumes that inefficiencies emerge with more than two partner nations. Inevitably, data problems made what appears to be a simple hypothesis difficult to test. The major result is that there is no evidence that efficiency as measured by development times is adversely affected by the number of partner nations. A limited sample regression and a comparison of Airbus vs. Boeing shows a similar conclusion.

Flexible networks and the restructuring of the regional defence industrial base: The case of south west England

Most defence‐dependent regions of the major arms‐producing nations have experienced adverse economic consequences following the decline in global defence expenditure since 1990. In the context of one defence‐dependent region, the South West of England, this paper explores the impact upon the regional defence industrial base and the important linkages that exist between prime contractors and companies in their supply network. The authors identify a number of critical imperfections embedded in regional defence industrial supplier networks. These imperfections both present barriers to change, hamper the smooth adjustment of the regional economy to external shocks and are not captured by orthodox regional impact assessment methodologies. This may result, therefore, in a failure to predict the full impact of changes in defence expenditure at the regional level and may incorrectly inform policy‐makers.

Puppets or Partners: The Defence Industry Supply Chain in Perspective

National and international defence markets are experiencing both rapid and fundamental change in the face of a variety of factors, both defence specific and non-specific, exogenous and endogenous, short-term and long-term. Reorganisation in the structure of defence supply industries, however defined1 (see Hooper and Buck, 1991) and the relationships between constituent defence firms are both a function of these changes in the defence markets and a cause of the revolution in the structure of, and behaviour in, these markets. For the defence firm, this volatile and uncertain environment brings with it both opportunities and threats.

More for Less? Exploring the Economic Dimensions of Multilateral Collaboration in Military Aerospace Projects

More for Less? Exploring the Economic Dimensions of Multilateral Collaboration in Military Aerospace Projects Faced with declining defence budgets and spiralling weapon costs, international collaboration in military production appears both a sensible and attractive ‘value for money’ solution. International collaboration offers in theory the opportunity for both cost- and risk-sharing between members of the collaborating group, making military projects feasible that could not be entertained (financially or perhaps technologically) by one country or one company.

The Economic Impact of the Conflict in the Balkans: The Case of Serbia

The Handbook on the Economics of Conflict conveys how economics can contribute to the understanding of conflict in its various dimensions embracing world wars, regional conflicts, terrorism and the role of peacekeeping in conflict prevention.