I have been doing a lot of thinking lately about the nexus between the politics and the economics of arms sales. It is a question that lies at the heart of my dissertation, but one which is mostly inadequately appreciated by both economists and political scientists. I had my class (Politics of Arms in International Relations) read some pieces this week which relate to this decision-making nexus and it has brought some of these issues back to the forefront in my own thinking.
First off is a great quote from Smith, Dunn, and Fontanel (1985) about the problems of politics in the transfer of arms [1]. (Emphasis is mine)
Smith et al (1985) argue that there are three primary reasons for states to wish to sell weapons:
Caverley and Kapstein [2] look at similar arguments in the case of the United States arms production. They argue that the US lost its advantage in arms exports because of the domestic demands of the pentagon. The penchant for the US military to ask for the nicest, highest spec equipment means that the finished product is priced out of range for non-domestic buyers. They give the example of the F-35, which was designed to be a low-cost high tech fighter that would be good enough for most missions and which would be eminently exportable. The rising costs of that aircraft have meant that many staunch allies have reduced or cancelled orders for the aircraft. The increased design specifications have made the aircraft less suitable for the domestic role that it was originally meant to fill.
This is an interesting dilemma. The world's superpower which has the advantage of a strong domestic market is being squeezed out because of the unrealistic demands of that same market. This echoes the findings of Smith and colleagues in the case of decreased military spending by Britain, GDR, and the US means fewer exports, while the opposite was true for France and Italy. They note that it was the civilian oversight of the procurement process in those states - with an eye toward exports - that caused this result.
I had some articles in my newsfeed about aircraft sales that made me think of these arguments today.
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Links
First F-35 built in Europe goes for its maiden Flight: LINK
Making F-35s more quickly can lead to problems: LINK
Kuwait is buying the Eurofighter. LINK
Brazil is buying a Swedish fighter: LINK LINK2
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REFERENCES
[1] Smith, Ron, Anthony Humm, and Jacques Fontanel. 1985. “The Economics of Exporting Arms.” Journal of Peace Research 22(3): 239–47.
[2] Caverley, Jonathan, and Ethan B. Kapstein. 2012. “Arms Away.” Foreign Affairs 91(5): 125–32.
First off is a great quote from Smith, Dunn, and Fontanel (1985) about the problems of politics in the transfer of arms [1]. (Emphasis is mine)
"Although arms transfers comprise a significant component of world trade, they have received little attention from mainstream economists. This partly reflects the data difficulties which inhibit accurate estimation and quantification, and partly the contamination of the topic by political and strategic elements beyond the economists' expertise."The idea that an issue is contaminated by political and strategic elements is an interesting perspective of political science. It is refreshing to see economists admit that there may be something that is beyond their expertise as well!
Smith et al (1985) argue that there are three primary reasons for states to wish to sell weapons:
- Strategic: governments wish to maintain an indigenous arms industry ins order to ensure weapons designed exactly to their requirements, national independence of supply, and access to the latest military technology. There is an incentive to export, even if exports are below the average cost. (242-3)
- Political leverage in foreign policy: nation can assist their "friends" by strengthening their military position while at the same time having potential to influence their behavior (Kinsella tie-in) or that there is a prohibition that weapons not used aggressively or for internal repression (tie-in with Blanton). (243)
- Economic benefits: these include technological spin-offs, employment benefits, economic momentum (243-44)
Caverley and Kapstein [2] look at similar arguments in the case of the United States arms production. They argue that the US lost its advantage in arms exports because of the domestic demands of the pentagon. The penchant for the US military to ask for the nicest, highest spec equipment means that the finished product is priced out of range for non-domestic buyers. They give the example of the F-35, which was designed to be a low-cost high tech fighter that would be good enough for most missions and which would be eminently exportable. The rising costs of that aircraft have meant that many staunch allies have reduced or cancelled orders for the aircraft. The increased design specifications have made the aircraft less suitable for the domestic role that it was originally meant to fill.
This is an interesting dilemma. The world's superpower which has the advantage of a strong domestic market is being squeezed out because of the unrealistic demands of that same market. This echoes the findings of Smith and colleagues in the case of decreased military spending by Britain, GDR, and the US means fewer exports, while the opposite was true for France and Italy. They note that it was the civilian oversight of the procurement process in those states - with an eye toward exports - that caused this result.
I had some articles in my newsfeed about aircraft sales that made me think of these arguments today.
_________________________
Links
First F-35 built in Europe goes for its maiden Flight: LINK
Making F-35s more quickly can lead to problems: LINK
Kuwait is buying the Eurofighter. LINK
Brazil is buying a Swedish fighter: LINK LINK2
__________________________
REFERENCES
[1] Smith, Ron, Anthony Humm, and Jacques Fontanel. 1985. “The Economics of Exporting Arms.” Journal of Peace Research 22(3): 239–47.
[2] Caverley, Jonathan, and Ethan B. Kapstein. 2012. “Arms Away.” Foreign Affairs 91(5): 125–32.
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