The Economic Contribution of Defence Manufacturing

The economic contribution of defence manufacturing comes from additional jobs and exports, although it is dependent on its supply chain.

There are economic advantages in making defence equipment, rather than buying it:

●  The industry creates jobs, which are economically beneficial (3.2.5) and politically popular.

●  The country is less dependent upon other countries to support its defence capability, but no country can now avoid the need to buy some materials and components from other countries. This was noted in 2009, in T.J. Rowntree’s paper: Is globalisation undermining the military capability of the nation state – and does it matter?   The geopolitics of trade agreements is now much more significant than when that paper was written (

A defence manufacturing industry also creates the opportunity to export equipment and services to other countries.  This has advantages:

●  The exports are helpful to the economy (

●  The exports increase the total volume of manufacturing, giving it economies of scale and thereby reducing the cost per item (3.3.2), so it becomes cheaper for the exporting governments to equip their own armed forces.

The beneficial economic contribution of defence manufacturing has led to one of the remaining elements of protectionism within the EU – as when Angela Merkel prevented BAE Systems from merging with EADS in October 2012, reported in an Economist leader, A European mega-merger? Nein, danke.



This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/7463.htm.