188.8.131.52 The Economic Benefits of Defence Manufacturing
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, though no country can now avoid the need to buy some materials and components from other countries – as pointed out in T.J. Rowntree’s paper, Is globalisation undermining the military capability of the nation state – and does it matter?
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 (184.108.40.206).
- 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 economic attractions of making, rather than buying, defence equipment have 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.
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