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Arms Industries, Arms Trade, and Developing Countries

In: Handbook of Defense Economics

Author

Listed:
  • Brauer, Jurgen

Abstract

This chapter discusses developing (non-high income) states' participation in the production and trade of parts or whole units of major conventional weapons, their integration into a transnationalized global arms industry, and the underlying industrial prerequisites that make that participation and integration possible. Drawing on the vertical boundaries of the firm literature, the chapter provides a theory that explains some aspects of post-Cold War shifts in the composition and location of arms production. The chapter further discusses characteristics of the small arms and light weapons industry. A highly lethal industry with far-ranging adverse effects on public health, education, and institutions of law and order and therefore on work incentives and investment climate, it is suggested that the horizontal boundaries of the firm literature, especially the product-cycle hypothesis, may explain certain features of the spacial and temporal diffusion of small arms production, technology, and supply. Newly emerging literature on small-arms demand is also discussed. Furthermore, the chapter examines the widening presence of non-high income states in the production of weapons of mass destruction. Vertical contracting and R&D/patent-race literatures are applied to the case of nuclear weapons. Major conclusions of the chapter include that data sources are poor, that arms production and trade theory is underdeveloped, and that although non-proliferation regimes may have slowed weapons proliferation, they have failed to stop it. We observe industry entry in all weapons categories and in future may expect to see further increases in industry participation by non-high income states, should they choose to do so. This is the natural consequence of the gradual development of non-high incomes states' production capacities. We also observe, however, that states sometimes exit the arms industry or choose not to participate in it, despite their capacity to do so.

Suggested Citation

  • Brauer, Jurgen, 2007. "Arms Industries, Arms Trade, and Developing Countries," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 30, pages 973-1015, Elsevier.
  • Handle: RePEc:eee:hdechp:2-30
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    Citations

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    Cited by:

    1. Jurgen Brauer & John Paul Dunne, 2011. "Arms Trade Offsets: What Do We Know?," Chapters, in: Christopher J. Coyne & Rachel L. Mathers (ed.), The Handbook on the Political Economy of War, chapter 13, Edward Elgar Publishing.
    2. Florian Johannsen & Inmaculada Martínez-Zarzoso, "undated". "Political Determinants of the Extensive and Intensive Margins of International Arms Transfers," Ibero America Institute for Econ. Research (IAI) Discussion Papers 228, Ibero-America Institute for Economic Research.
    3. Alshamy, Yahya & Coyne, Christopher J. & Goodman, Nathan, 2023. "Noxious government markets: Evidence from the international arms trade," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 87-99.
    4. John Paul Dunne, 2012. "Military Spending, Growth, Development And Conflict," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 549-557, December.
    5. Shahbaz, Muhammad & Leitão, Nuno Carlos & Uddin, Gazi Salah & Arouri, Mohamed & Teulon, Frédéric, 2013. "Should Portuguese economy invest in defense spending? A revisit," Economic Modelling, Elsevier, vol. 35(C), pages 805-815.
    6. Jülide Yildirim & Nadir Öcal, 2016. "Military expenditures, economic growth and spatial spillovers," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(1), pages 87-104, February.
    7. Emmanuel Athanassiou & Christos Kollias & Stavros Zografakis, 2002. "The Effects of Defence Spending Reductions: A CGE Estimation of the Foregone Peace Dividend in the Case of Greece," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(2), pages 109-119.
    8. Vincenzo Bove & Claudio Deiana & Roberto Nistic�, 2018. "Global Arms Trade and Oil Dependence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(2), pages 272-299.
    9. J. Paul Dunne & Ron P. Smith, 2016. "The evolution of concentration in the arms market," Economics of Peace and Security Journal, EPS Publishing, vol. 11(1), pages 12-17, April.
    10. Coyne,Christopher J., 2020. "Defense, Peace, and War Economics," Cambridge Books, Cambridge University Press, number 9781108724036, October.
    11. Michail Ploumis, 2017. "Hellenic Defence Industrial Base in the Era of Economic Crisis," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 15(2), pages 103-125.
    12. Gallea, Quentin, 2023. "Weapons and war: The effect of arms transfers on internal conflict," Journal of Development Economics, Elsevier, vol. 160(C).
    13. J. Paul Dunne † & Sam Perlo-Freeman ‡ & Aylin Soydan §, 2004. "Military expenditure and debt in small industrialised economies: A panel analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(2), pages 125-132, April.
    14. Smith, Ron P. & Tasiran, Ali, 2010. "Random coefficients models of arms imports," Economic Modelling, Elsevier, vol. 27(6), pages 1522-1528, November.
    15. Aviral Kumar Tiwari & Muhammad Shahbaz, 2013. "Does Defence Spending Stimulate Economic Growth In India? A Revisit," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(4), pages 371-395, August.
    16. Killicoat, Phillip, 2007. "Weaponomics : the global market for assault rifles," Policy Research Working Paper Series 4202, The World Bank.
    17. Christos Kollias & Suzanna-Maria Paleologou, 2011. "The Macroeconomic Effects of Conflict: Three Case Studies," Chapters, in: Derek L. Braddon & Keith Hartley (ed.), Handbook on the Economics of Conflict, chapter 14, Edward Elgar Publishing.
    18. Raul Caruso & Andrea Locatelli, 2013. "Company Survey Series Ii: Finmeccanica Amid International Market And State Control: A Survey Of Italian Defence Industry," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(1), pages 89-104, February.

    More about this item

    Keywords

    Defense in a Globalized World;

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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