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The purpose of this paper is to examine the performance of Indonesia’s informal offset policy over the period 1976-2014. The paper offers four original academic perspectives: firstly, it is framed by reference to what Indonesia’s former Minister of Technology, Dr Habibie, described as the Progressive Manufacturing Plan, a novel approach in which offset was intended to play a critical supportive role in the systematic development of strategic civil-military industries; secondly, the analysis is structured into three distinctive ‘development-survival-revival’ industrialisation stages that impacted on the performance of both offset and the broader defence economy; thirdly, the study is uniquely different in the sense that the offset case studies all occurred in an era absent of a formal offset policy regime; and lastly, the study provides a wealth of rich data in a subject field well-known for its sensitivity, if not secrecy, and thus is characterised by a paucity of empirical evaluation.

This article provides the context for the articles in this Special Issue on Sweden and its defence. The article starts with Sweden before presenting Swedish defence, its economy, the military threa...

This article investigates the context and development of the Israel Defence Industries (IDI) during the period 1930–2018. During this timeframe, the IDI was forced to transform several times with t...

Contemporary warfare is increasingly shaped by the complex relationship between the privatization of security and technologically driven automation. On the one hand, there is a growing tendency to employ private military and security companies for a range of military support tasks. On the other hand, the growing automation of security technologies is bound to make war less manpower intensive. Combat systems will have much more autonomy and humans will be working more closely with machines than they do today. The article provides an original analysis on the interplay between the privatization of security tasks and technologically driven automation and investigates their impact on the defence industry and the armed forces. These two sets of actors are arguably among the most impacted by the multi-faceted relations between privatization and automation. Technological progress creates the need for contractors to maintain and operate platforms that militaries do not have expertise to run. However, technologically driven automation - often developed in value chains far removed from the military-industrial pipeline - might also replace private contractors in non-core security tasks. The possibility to employ automated and autonomous systems will hence impact on the already delicate balance between private contractors and publicly-funded armed forces.

This paper examines the performance of the Greek defence industry in terms of their (co)authoring of scientific publications. In the context of knowledge-intensive technological and industrial poli...

The Israeli defence industry is a frequently cited factor when explaining Israeli’s innovation success. This, however, only partly explains why so much innovation is occurring in one place. We focu...

Despite considerable restructuring since the end of the Cold War, the European armoured vehicle industry remains largely fragmented along national lines. As stagnating domestic budgets, rising R&D and production costs and the limits of export-focused industrial strategies provide an economic imperative for further consolidation, the merger of Nexter and Krauss-Maffei Wegmann in 2015 has often been regarded as a mere starting point for a wider trans-European reorganisation process which could even result in a land-based equivalent to Airbus. This article proposes a new classification system to identify the ���prime competitors��� of the European armoured vehicle industry and debates prospects for further consolidation among them. By means of a volume-based variant of the HHI, concentration in European procurement of armoured vehicles is estimated and various merger simulations are conducted. The results suggest that, while the European armoured vehicle industry will likely experience further consolidation, this process will probably be too small in scope to create an ���Airbus of the land systems sector���. In the medium to long term, however, market pressures and collaborative programmes such as the Main Ground Combat System might have the potential to create a ���European champion��� in selected subsectors of the armoured vehicle industry.

This paper examines the importance of closer co-operation in defence-related procurement. Led by the decision that Belgium will lead the procurement of 12 Mine CounterMeasures Vessels (MCMV), the case of a potential Belgian naval construction cluster is discussed. The feasibility of a potential cluster is investigated by looking at key elements of a successful naval construction cluster, the Dutch naval construction cluster, and comparing those key elements to the current Belgian situation. Forming a sustainable Belgian naval construction cluster will be difficult. Most of the procurement process of the MCMVs is set on a European tender. In the long run, due to the absence of both a launching customer and leader firms, no party is able to carry the cluster with investments and knowledge spill-overs. In order to keep public support for large defence-related investments, clustering around the MCMV integration system and proactive cluster support is recommended.

The paper’s goal is to analyses the potential of the Iranian defence industry, including both research-and-development and production capabilities. It is argued that, despite official statements ab...

Covering the period of 1990–2020, the paper summarises the evolution of the iron triangle of the mutual relationships amongst the ministry of defence, defence industry, and the political elite, in the post-communist Czech Republic. In essence, the essay stresses the oddness of this relationship. On the one hand, the government is bound by a partnership to the Defence and Security Industry Association of the Czech Republic (DSIA), a lobbying group of more than 100 organisations that conduct business in defence and security sector in the Czech Republic. Yet, since its creation in 2000, this assemblage of industries within DSIA’s market position is falling, in fact. Neither political parties in power, nor the governments have been able to support national defence industry through the military. Although some subsidiaries of multinational armament concerns are DSIA members, the transnational military-industrial complex utilises DSIA only as a proxy for distribution of their products in the Czech Republic with the assistance of national military elite. Just a few DSIA national members are able to compete internationally with their cutting edge products. Others have evolved into middlemen trading in time-expired Soviet and Czechoslovak equipment retired from the Czech Armed Forces. S využitím konceptu železného trianglu je rozbrána evoloce vztahů mezi Ministerstvem obrany, obranným průmyslem a politickými elitami v České republice od roku 1990. Článek zvýrazňuje zvláštnost těchto vztahů. Na jedné straně se vláda rozhodla svázat se požadavky Asociace obranného a bezpečnostního průmyslu (AOBP), lobistickou organizací zastupující zájmy více než 100 subjektů. Ovšem výsledkem tohoto partnerství vzniklého v roce 2000 je úpadek národního trhu AOBP. Ani politické strany, ani vlády nebyly schopné podpořit národní výrobce prostřednictvím vojenské politiky. Ve skutečnosti slouží AOBP zájmům mezinárodního vojenského komplexu pro prodej jeho produktů za asistence národní vojenské elity. Je několik členů AOBP je schopno mezinárodní konkurence. Ostatní se často soustředí na přeprodej sovětské vojenské techniky vyrobené v Československu, která byla vyřazena z Armády ČR.

The European arms industry is challenged by several adverse ‘headwinds’. Fragmentation leads to costly duplications and, in conjunction with stagnating budgets and sharply increasing costs, prevents firms from exploiting economies of scale and learning. This is exacerbated by size differentials vis-a-vis the leading US arms manufacturers and competition from emerging producers. As some ‘headwinds’ are self-enforcing, far-reaching industrial and policy responses are required to improve the industry’s outlook. As exports may not indefinitely compensate for low domestic demand, there is an economic imperative for further cross-border collaboration and consolidation. Despite various EU policy initiatives, progresses regarding the European Defence Equipment Market and strengthening the European Defence Technological Industrial Base have been relatively slow. It remains to be seen whether the European Defence Fund will be the proclaimed ‘game-changer’, raising competitiveness of the European arms industry. At the same time, the UK’s withdrawal from the EU adds uncertainties.

Cost escalation for many complex defence equipment is arguably not sustainable. Customer driven requirements have led to an exponential increase in costs by pushing frontiers of technology to suppo...

This study extends existing scholarship on the influence of corporate/industry investments on the onset of military interventions in civil wars challenging prior null findings. It proposes ...

The European Commission's proposal for the €13 bn European Defence Fund (EDF) to incentivise collaborative defence research and capability development projects with EU funding was an ambitious stat...

Germany’s export-oriented defence industry, like most other “large” European producers, aims to maintain its “key” capabilities whilst the scope for national approaches narrows further. Given the r...

When it comes to states arming themselves, it has become axiomatic among scholars of comparative defence industries that go-it-alone production is no longer an option for most. The processes associated with defence-industrial globalization combined with the ever-rising costs of producing leading-edge weapons systems present huge disincentives for autarky in armaments. Against these strong headwinds, however, India has recently launched, as part of a broader, multi-sector initiative called Make in India, a renewed effort to achieve greater self-reliance in armaments production. This article first places India’s recent defence indigenization efforts within wider discussions about states’ armament strategies and trends in global arms production. Secondly, it contextualizes the drivers behind New Delhi’s latest attempts to transform itself from leading arms importer to major producer (and significant exporter) against the backdrop of past efforts which have yielded little but disappointment. Third, it explicates the main facets of the current strategy for defence-industrial indigenization and gauges its chances for success. To preview the main findings, we argue that self-reliance in armaments via indigenous production will almost certainly continue to allude India because of systemic, structural and technological constraints.

The usage of foreign direct investment (FDI) is a crucial element in the economic growth literature focusing on sustainable development. In the case of the aerospace sector, security consid...

Despite China’s rise on the world stage and rapid improvements in the quality and quantity of its arms production, little is truly known about Chinese defence groups’ performance. The existing lite...

The First Fundamental Theorem of Welfare Economics states that, under certain conditions, markets are able to supply goods and services in a way that is Pareto efficient. However, these stringent c...

The article examines the organisational transformation of the Russian defence industry during the period of privatisation and radical market reforms. The study is based on the results of an origina...

This article analyses the defence industrial market using an agent-based model. The model draws a simplified version of the sector regarding the market agents and their conduct based on emp...

During the past decade, China’s defence industry has experienced significant reforms, with increasing numbers of defence companies being listed on the stock market. Meanwhile, China’s stock market ...

With the Canada First Defence Strategy, Canada has put forth a major opportunity to reconcile national security imperatives and industrial policy. The Jenkins Report (2013) set out to examine ways to use that procurement effort to foster key industrial capabilities (KICs) that would put the Canadian defence industry at an advantage both nationally and internationally. The Canadian defence industry should then develop highly focused capabilities with a view to moving up global value chains. As such, KICs that hold the best potential should be selected. They should be sustained through a range of strategies that are however contingent on the elimination of policy gaps. This leads to a balancing act between the need to control intellectual property assets versus accessing them in a world where national boundaries are eroded. Canada’s industry should target opportunities outside North America while continuing to focus on better integration with the North American industry.

In the late 1960s, a workers’ movement at Lucas Aerospace was formed and proposed alternative products other than military production. Reacting to some 5000 redundancies in the company across its 13 sites nationally, a ‘combine’ committee of shop-stewards and workers accused the company management of lobbying for defence orders ahead of civilian manufacturing. Despite acclaim for the combine from the left-wing of the Labour Party and the disarmament movement, the 1974–1979 Labour Government did not favour the workers’ proposals and referred the combine to the Confederation of Shipbuilding and Engineering Unions. Behind the scenes, Labour ministers at the Department of Industry felt that the combine would upset the balance of the defence industry, which was at that time an important contributor to employment and the balance of payments, as well as Britain’s military role in the Cold War.

The creation of the European Defence Agency (EDA) in 2004 represented an important step towards more cooperation in the European defence industry. Notwithstanding the Agency’s potential for redefin...

The debate over the benefits and drawbacks of defence industrialisation, particularly for emerging states, is far from settled but, as the case studies in this symposium suggest, a growing number of these states are taking steps to advance their defence industrial capabilities. In this volume, we attempt to decipher the reasons why states make that choice and why they choose to adopt a particular defence industrial policy.

How have European cross-border defence industrial mergers and acquisitions affected domestic procurement bias among the major EU powers? This article departs from the findings of Andrew Moravcsik more than two decades ago suggesting that major West European states had no ingrained preferences for defence industrial autarchy. When cross-national armament projects were derailed, this could be attributed to political efforts of national defence industrial champions favouring purely domestic projects. As former national champions join pan-European defence groups, their preferences are likely modified. Does this shift procurement towards non-European “off-the-shelf” solutions which, according to Moravcsik, are favoured by defence departments? Or does it give impetus to a stronger preference for European as opposed to domestic systems? In this article, procurement patterns in the aftermath of cross-border defence industry consolidation will be analysed. Procurement bias is assessed in two industry segme...

The study of the behaviour of adhesive joints under impact loadings is a very active field of research, driven by significant industrial interest. Many industries, such as the automotive industry, are currently employing adhesive joints extensively, making use of the inherent properties of adhesive joints to improve the mechanical behaviour, reduce weight, and simplify manufacturing. Reduced structural weight is achieved by combining multiple lightweight materials, which is made possible by using adhesive joints. Impact strength is also a major factor, as vehicles must be able to provide adequate safety levels for their occupants during collisions. Another example of industrial application is the defence industry, which uses bonded structures to withstand ballistic impacts, with extremely high impact velocities. Understanding the behaviour of adhesive joints under impact is, therefore, crucial for designing stronger and safer structures. This document aims to review the research that has been prev...

Although the long-term implications of Brexit are difficult to predict, it is possible to envision potential and likely scenarios in various areas. This article focuses specifically on Brexit’s effects on European armaments cooperation. With the intention to stimulate academic and political debate, this analysis takes an alternative path from the widespread pessimistic perspectives about post-Brexit EU-UK relations. In contrast, it offers a scenario in which European armaments cooperation could, surprisingly, benefit from the UK’s withdrawal from the EU. Specifically, Brexit could be a win-win situation for two main reasons. First, Brexit need not damage EU-UK defence-industrial relations. Second, Brexit will force EU countries to take important steps towards greater armaments cooperation. These initiatives are likely to generate an increase in EU defence spending and may also induce a spill over effect in the UK.

Bukkvoll, Tor; Malmlof, Tomas; Makienko, Konstantin. The defence industry as a locomotive for technological renewal in Russia: are the conditions in place?. Post-Communist Economies 2017 ;Volum 29.(2) s. 232-249

It is a cliche to say that Europe, including its underfunded defence industry, faces numerous challenges and threats. Nevertheless, it is impossible not to notice or to ignore issues, such as the c...

The Economics of the Global Defence Industry is a thorough treatment of a challenging subfield of defence economics. It is an important addition to the libraries of scholars of defence economics, s...

An edited volume dealing with a spectrum of countries and their defense industries is conceivably a challenge to produce, but also to review. The challenge rests with taking a ‘’love for variety” a...

The Trudeau government’s decision to uphold a 2014 contract to sell CAD $15 billion worth of military equipment to Saudi Arabia has attracted considerable controversy in Canada, garnering both oppo...

Prime Minister May’s recent announcements strongly suggest that the Government will seek a “hard” Brexit in negotiations with the EU. For the UK government, this is likely to mean that the UK will seek to leave the Single European Market as well as the European Customs Union. Although this provides clarity as to the UK’s government’s position, it fails to recognize that the choices available to the Government are inherently linked to the choices made by others in the Brexit negotiations, the EU and the member states in particular. In this article, we explore what Brexit means for the UK’s future defence procurement options and its defence trading relationships with the remaining 27 European Union member states. We explore two Brexit scenarios: in the first (and now less likely but still feasible) scenario, the UK remains within the EU Single European Market (SEM) provisions for defence procurement and trade. In the second (and now more likely) scenario, the UK leaves the SEM and operates outside EU rules, regulations and directives. Within this scenario, we see two options. In the first place, the UK could successfully negotiate a Free Trade Agreement (FTA) with the EU which allows for tariff- and barrier-free access to the SEM. Second, the EU could insist on particular trade-offs (e.g. tariffs on key sectors or particular forms of free movement of people and goods) that are unacceptable, causing the FTA to collapse and forcing the UK to follow World Trade Organisation rules. We argue that in both scenarios, old tensions and logics will play out in the new post-Brexit system and will have deep ramifications for defence procurement and industries. We also argue that the post-Brexit choices available to the UK government will not be ‘‘hermetically sealed’’ from other players in the negotiations; rather they are contingent on the extent to which the remaining EU states pursue further defence procurement integration and the potential responses of major UK-based defence contractors.

This article surveys the body of available evidence regarding the spill-over effects of defence RD the barriers that impede or block such a process; potential negative repercussions, and the measure of such effects. The main conclusion is that the uncertainty of these effects, and the inaccurate appraisal of their value, hardly supports informed decisions concerning defence R&D policies.

This article analyses India’s economic, military and political rise in the international state system. It concludes that India is on the rise in all three power dimensions, underpinned by a larger share of global GDP. However, it also identifies the constraints on the way. On matters concerning its economy, India lags behind in industrial prowess, innovation, socio-economic development and financial strength. While modernising its defence capabilities, it faces obstacles due to budget issues, institutional constraints and a weak defence industry. At the global level, its political leverage is circumscribed by its small diplomatic corps, limited foreign aid, underutilised soft power assets and by an immediate neighbourhood that consumes much of its political energy. India’s rise could also be delayed by various domestic constraints as well as failure to adapt to ‘the second machine age’ and ‘the return of geopolitics’. Nevertheless, the probabilities of India’s continued rise in the international s...

Defence industrial policy – a sound security strategy or an economic fallacy? Arne Martin Fevolden and Kari Tvetbraten Defence Studies Vol. 16 , Iss. 2,2016

This study explores the effect of the Paris terrorist attacks on the stock returns and the volatility for the most important companies in the global defence industry. To this end, it employs the General Autoregressive Conditional Heteroscedasticity methodology. The findings clearly indicate that this terrorist event has a positive impact on both the returns and the volatility of these stocks.

European defence industry is facing several political and economic challenges which are creating the need for solutions going beyond national level. The turbulences around the European Union’s budg...

This article reviews innovation processes in defence. It analyses the way and the context under which these processes are carried out. The article covers the features of defence goods with impact on innovation, the development of a new good, the institutional arrangements that support these processes and the effect of innovation on industrial market. The analysis helps to identify the causes of facts observed in practice, such as poor performance in terms of product quality, cost or delivery time, as well as to assess potential remedies. Some policy implications, which can be derived from this analysis, are finally outlined.

This article investigates how defence contractors’ competence profiles affect their export performance. It explores two competing hypotheses derived from international economics and business studies that (i) it is beneficial to be a specialist supplier and focus on a related set of competencies and (ii) it is beneficial to be a system integrator and assemble a broad set of competencies. It makes use of a unique and especially rich data set that includes close to 250 competency variables. These competency variables are used to compute entropy scores for the defence contractors, which again are used in in a fractional logit model to test the two hypotheses. The article concludes that the data only support the second hypothesis – that it is favourable to be a systems integrator.

Since the Vietnam War, Australian defence policy has been based on the concept of self-reliance—the ability to defend Australia without allied combat forces. Self-reliance arose from concerns about US support in conflict with Indonesia. It has implications for Australian foreign policy, force structuring, joint operations and the defence industry, which were most coherently laid out in the 1987 White Paper. Later White Papers adapted this framework, but the 2013 White Paper seems to move towards a new approach to defence policy and strategy, which continued use of the term ‘self-reliance’ obscures rather than elucidates.

A Yes vote in the September referendum on Scotland’s independence would have considerable consequences for the armed forces, both in the rest of the UK and in the newly independent state. Malcolm Chalmers analyses recent developments in the Scottish defence debate, assessing issues such as the proposed size of the armed forces, budgets, timelines, and the prospects for the defence industry.

Saudi Arabia is one of the most proliferate military spenders in the world, and this article assesses the multiple reasons for Saudi Arabian defence spending. Possible motives include arming against external threats, buying internal loyalty, gaining national prestige, and soliciting support from important external patrons, especially the United States. The article argues that while Saudi Arabia does seek to improve its military capability through increased defence spending, and gain prestige and internal support, the most significant reason for the increased investment for arms sales is to gain political support in the United States, as Saudi military money preserves some defence sector jobs in the American defence industry, potentially replacing American employment that would otherwise drop because of expected US defence budget reductions. By contributing in a small but targeted way to the American economy, Saudi Arabia can try to leverage American support for its security and foreign policy req...

This paper analyses the main drivers of R&D investment in the Spanish defence sector at the firm level. In particular, we analyse the factors influencing the decision to innovate or not, and those ...

In this article, the author scrutinizes the impacts of globalization on the Swedish national defence industry prompted by the end of the Cold War through the 1990s. Through analysing the data from international, Swedish government and industrial sources, the author establishes that the Swedish defence industry, due to its overreliance on arms exports as a result of post-Cold War globalization, has become increasingly irrelevant to Swedish defence needs. We may see the end of a ‘national’ defence industry in the Swedish case. The author further argues that overreliance on arms exports to extra-European markets leads to the erosion of Swedish national security and Swedish defence readiness. The author concludes that multinational business-interest analysis is needed to generate a closer examination of the export-oriented Swedish defence industry in the context of globalization.

How effective are offsets as a means to boost a domestic defence industry? This article takes a novel approach to answering this question; examining global data on levels of defence sales over three decades as a measure of successful defence industrialisation (i.e., using the market as an indicator of success). The quantitative data points to a mixed picture as despite the ubiquity of defence offsets, they are no guarantees of success in defence industrialisation. It concludes that offsets can be an important part of a defence industrialisation strategy, but are not in themselves sufficient for success.