Defence economics

Defence economics
Despite its economic benefits and also materiality that challenged military research and development or the problem of the reconversion of the military-industrial complex, defence economy remains both serious security concerns indicator and a tool at the service of diplomacy for the realization of the overall strategy of the States.

Defence economy affects a multitude of issues and economic disciplines. Whether of industrial or organizational, qualification of the workforce, behaviour of members of an alliance, eviction or defense on the economy-wide spending externality effects aspects; his field of study is more extensive recent economic theories can deal with it in a more open way.
In fact, economic defence covers both so-called operating expenditures and military equipment loans and the arms trade. Other military expenditures are not always recorded in the States (constitution and management of stocks of raw materials, research and every effort) defence budgets. External conflicts are funded by a budgetary collective. In 1991, the US funded the Gulf war of external funds ($53 billion), brought about mainly by Saudi Arabia and the Kuwait. Today, Americans against the Iraq war effort is covered by a special budget extension of the order of $ 80 billion.

Also, according to the Centre for advanced studies armaments (Chéar) activities around the world represented in 1990 equivalent to 1,000 billion, or roughly the amount of total outstanding debt of developing countries. However, military spending, the statistics are as dangerous as a mine field and must therefore be understood with a lot of precautions.

These reservations made the overall figure for 1.000 billion gives an idea of the economic and industrial challenge. He translated also two trends of the period following World War II. First, the importance of military spending in the world, which has led to a situation of armament (United States of America, including ex-USSR) Northern hemisphere. Then, the proliferation of systems - not only conventional, but also chemical, or nuclear - weapons in the developing world and led to an excessive militarization of the third world.

This armament as well as the militarization of the third world provoked by reaction, reflections and disarmament negotiations. Engaged in the 1970s, the disarmament process is accelerated with the fall of the Berlin wall and the implosion of the Soviet Union.

In this respect, everyone agrees that the collapse of the Soviet Union is closely linked to the excessive weight of its military spending, which eventually alter its international competitiveness. On the contrary, the Germany and especially Japan defeated both World War II, are the winners of the "cold peace" because of the weakness of their military budgets, which did not have to support an important effort to nuclear weapons.

To kick off a new problem has emerged: how convert complex military-industrial, turned almost exclusively to the manufacture of the weapons in civilian installations system and what would the impact of the reduction of military activities in the economy?

Today, the evolution of military spending in the world can be assessed according to two criteria: from state appropriations defense; by the weight of these appropriations to the respective GNP. In absolute terms, the contemporary period is characterized by a decline in military appropriations after a substantial increase at the beginning of the 1990s (1.000 billion against 450 in 1980). The United States, the Russia, the France, the United Kingdom, the Germany and the Japan represent them six more than 70% of global military spending.

In relative value, the hierarchy is no longer the same. According to The Military Balance (2000 figures), the Middle East countries remain far those who spend the greater share of their national wealth to the defence. Iran: 23.5%; Saudi Arabia: 17.9% Israel: 15% etc. us lie around 6%, while the world average is 4.5%. A historical analysis shows, apart from a few peaks associated with periods of conflict or tension, a fairly high constancy in levies on national wealth.

Indeed, recession of industrialized countries defence budgets including has challenged a domain which usually sacrificed the cost performance, highlighting problems opening of competition and the tightening of economic duress.

However, the real evolution must be nuanced. Defence industry lies not in a world of pure competition and perfect, it is closer to an imperfect market. Regulatory constraint, barriers to entry and exit markets, the formation of the liberal monopoly prices or strategies of sometimes contradictory influence of the various actors characterized inter alia the functioning of the "military-industrial" complex

But far beyond legal constraints imposed by the public power (authorization to produce and sell weapons, the installations… security), defence market requires high and specific investments. The credibility of production, economic sustainability, reliability of the proposed equipment and the ability to accompany him to its life cycle are all considerations in a sector where the requirements were all time high.

However, globalization would significantly alter the relationship between the industrial and the States. There is already a major transition in the level of means of control and incentives available to the public authorities. A State industrial operator overrides the client state becomes the central element in the relationship between public authorities and industry. From the client state, two means of action available to policymakers are possible. The satisfaction of the client state requires industry to take into account its strategic interests such as maintaining skills and employment within the national territory. Client-state is also a means to strengthen or weaken the industries of weapons on the international market.
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