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This chapter has only for an ambition to introduce the present book with obiter dicta about the bridge between defence ‘realm’ and economics ‘realm’ named ‘defence economics’. Especially to non-French readers it proposes some insights into the French defence institutions and policy which could be startling, by nature and by the fact that the French reality is rarely presented in defence specialised journals. To realise the introductory function, the chapter reviews 100 papers, which were available online at the beginning of 2011 spring, and tries to classify them along the lines drawn from a tentative to define precisely the concept of defence policy, for the sake of the too rare students interested in defence studies.

This chapter discusses the ongoing transformations of the French defence support. Considering the importance of economic activities related to defence support, this contribution aims at discussing the evolution of defence support and its costs for the State. The literature in defence economics presents very little analysis of defence support in its different forms. Neither space nor base locations have been deeply analysed in such a literature. We try to bridge this gap in an original research framework. We focus on the Maintenance, Repair and Overhaul (MRO) of defence platforms. More particularly, we focus on the array of measures that surround French defence support in MRO since the end of the 1990s. Considering both economic and spatial leverages, how can the organisation of MRO be optimised? With concepts from spatial economics, we propose a new look on the defence support system. We examine new economic interconnections (e.g. Public Private Partnerships and outsourcing) between military and civilian activities. More broadly speaking, this path of research could help us to better understand the new type of economic interrelations between defence organisation and ‘territory’ as a social fabric.

The improvement in the efficiency of public management leads to an increase in the quality of services, boosting confidence in institutions and thus generating a multiplier effect. This paper aims to update the literature on the data envelopment analysis (DEA), which uses a frontier methodology, for measuring the efficiency applied to the defence sector.

Two main research areas are related through this study: Defence Economics and Efficiency and Productivity Analysis. The frontier methods for measuring technical efficiency are grouped into parametric, non-parametric and semi-parametric. The DEA literature review in the selected sector allows to identify three main fields of work that are discussed in detail.

Existing empirical research has hardly applied bootstrapping methods to remove bias from the estimates. No empirical work has applied an analysis of efficiency determinants by the inclusion of exogenous variables.

The managerial implications of efficiency are numerous. A line of research is proposed to examine the extent to which efficiency improvements have an impact on reputation and, therefore, on the image of and confidence in institutions. The link between Defence Economics and Corruption Economics is also considered.

La mejora de la eficiencia de la gestión pública conduce a un aumento de la calidad de los servicios, impulsando la confianza en las instituciones y generando así un efecto multiplicador. El presente trabajo tiene por objeto actualizar la literatura sobre la metodología frontera de medición de la eficiencia DEA, aplicada al sector de la Defensa.

A través de este estudio, se relacionan dos áreas principales de investigación: Economía de la Defensa y Análisis de Eficiencia y Productividad. Los métodos frontera para medir la eficiencia técnica se agrupan en paramétricos, no paramétricos y semiparamétricos. La revisión de la literatura DEA en el sector seleccionado permite identificar tres campos de trabajo principales que se discuten en detalle.

La investigación empírica existente apenas ha aplicado métodos bootstrap para eliminar el sesgo de las estimaciones. Ningún trabajo empírico ha aplicado un análisis de determinantes de la eficiencia mediante la inclusión de variables exógenas.

Las repercusiones de la eficiencia en la gestión son numerosas. Se propone una línea de investigación para examinar en qué medida las mejoras de la eficiencia repercuten en la reputación y, por consiguiente, en la imagen y la confianza en las instituciones. También se considera el vínculo entre la Economía de la Defensa y la Economía de la Corrupción.

States that the end of the Cold War created expectations of a peace dividend. Analyses and critically evaluates the set of myths about this dividend which emerged. Reviews the response of defence industries to disarmament and provides evidence from the UK.

The use of offsets is one of the main characteristics of international defence trade. The rising costs of defence equipment and the significant contraction of defence spending have resulted in an environment that favoured the use of offset policies, the latter becoming increasingly demanding in both quantitative and qualitative terms. The chapter analyses the role of offsets on the process of integration of defence equipment markets, with a specific focus on the EU. Particular attention is given to the offset-relevant regulation and practice and to their recent evolution in the EU following the adoption of European Directive on defence and security procurement (81/81/EC). Offsets play a dual role with regard to the integration of defence industries: on one hand they can be trade-distorting and contribute to the survival of inefficient suppliers in arms importing countries; on the other hand, they can contribute in overcoming barriers that may otherwise prevent some potentially efficient suppliers from accessing the supply chains of the big system integrators. The chapter draws the attention on the need to complement the regulatory evolution by further initiatives aiming at improving the access of non-incumbent suppliers to the supply chains of the large defence system integrators.

Following the Gulf War, international discussions took place about multilateral restraints on “destabilising arms transfers”. Given that the UK is one of the leading exporters of arms, any reduction in such exports would affect the UK economy. The UK government spends considerable sums promoting such exports and it benefits from defence exports as they reduce the Ministry of Defence’s procurement costs. This paper analyses the direct financial implications of arms exports to the UK government, both as a buyer of defence equipment and as a promoter of such exports. The results suggest that in the UK each job generated by arms exports is subsidised by just under £2,000 per annum and that a one‐third reduction in UK defence exports would save the taxpayer some £76 million per annum (at 1995 prices).

The purpose of this paper is to introduce cybernetic systems in defence management applications, to meet new challenges of the information society and use of system modelling for decision making.

The paper defines basic terms for understanding the complexity of the defence management applications, which is simplified using input‐output modelling.

The paper illustrates the interdisciplinary nature of cybernetics, systems and management sciences. The defence system is analysed and a general input‐output model for defence system development recommended.

New data technology and data availability provide perspective for applied research using scientific approach.

Cybernetic systems for defence provide analytical modelling for management applications.

The paper presents a concept and empirical evidence for defence system analysis and a new way of thinking that affects defence planning and defence management. A cybernetic, systemic and input‐output methodology provides solutions for defence management applications.

This paper aims to contribute to the literature on the changing role of the defence sector in the economy at industry and enterprise levels focusing on defence‐civilian cooperation and defence supply networking with foreign industry enterprises from complex industry‐perspective.

Measuring is based on the comparative industry data and the unique survey evidence for the Slovenian defence industry enterprises to derive managerial and policy implications.

The role of the defence industry in the economy declined, but trade deficits from arms and ammunition increased. The industry enterprises can gain from defence‐civilian cooperation and defence supply chain networking with foreign industry enterprises. Information‐coordination institutions are seen to provide opportunities for future industry development in Slovenia.

This research focuses on Slovenia. Future enhancement of the research would be to look into the possibility of applying the findings to other countries. The size of the enterprise, and even more the size of the country, does matter in the defence‐market chain activities.

The proposed industry firm‐level survey approach provides useful policy and managerial implications in the evaluation of defence industry supply and market chain cooperation and networking activities with foreign industry enterprises. The study proves the usefulness of the results, both to the future organizational development and as a decision‐making tool in the complex industry systems.

This paper adds to the industry firm‐level analyses as data management tools for evaluating the defence‐civilian cooperation and networking of complex industry market chain activities for more effective management.

The European defence industry has changed considerably since the late 1980s. The end of the Cold War required the industry to undertake major restructuring, especially when governments, expecting to reap a “peace dividend,” drastically cut procurement spending. In the early 2000s this restructuring was also influenced by the new context of international security, even though defence budgets have started to increase again since 1998. The European defence industry could not expect to escape from a radical transformation, beyond the specific crisis engendered by the end of the Cold War.