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Arms Industries, Arms Trade, and Developing Countries

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  • 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.

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Bibliographic Info

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This chapter was published in:

  • Keith Hartley & Todd Sandler (ed.), 2007. "Handbook of Defense Economics," Handbook of Defense Economics, Elsevier, edition 1, volume 2, number 1, 00.
    This item is provided by Elsevier in its series Handbook of Defense Economics with number 2-30.

    Handle: RePEc:eee:hdechp:2-30

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    Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description

    Related research

    Keywords: Defense in a Globalized World;

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    Cited by:
    1. Smith, Ron P. & Tasiran, Ali, 2010. "Random coefficients models of arms imports," Economic Modelling, Elsevier, vol. 27(6), pages 1522-1528, November.
    2. Shahbaz, Muhammad & Afza, Talat & Shabbir, Shahbaz Muhammad, 2011. "Does defence spending impede economic growth? cointegration and causality analysis for Pakistan," MPRA Paper 30887, University Library of Munich, Germany, revised 27 Mar 2011.
    3. Tiwari, Aviral & Shahbaz, Muhammad, 2011. "Does Defence Spending Stimulate Economic Growth in India?," MPRA Paper 30880, University Library of Munich, Germany, revised 18 Apr 2011.
    4. Jurgen Brauer & J Paul Dunne, 2005. "Arms Trade Offsets and Development," Working Papers 0504, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    5. J Paul Dunne & Sam Perlo-Freeman & Aylin Soydan, 2003. "Military Expenditure and Debt in Small Industrialised Economies: A Panel Analysis," Working Papers 0306, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    6. Killicoat, Phillip, 2007. "Weaponomics : the global market for assault rifles," Policy Research Working Paper Series 4202, The World Bank.
    7. Dietrich Fischer & Jurgen Brauer, 2003. "Twenty questions for peace economics: A research agenda," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(3), pages 223-236.
    8. 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.
    9. Julide Yildirim & Selami Sezgin, 2003. "Military expenditure and employment in Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(2), pages 129-139.

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