Paris, Friday 10 January 2014
Inaugural lecture of the Defence Economics Chair
The level of global defence spending has changed significantly since the mid-1980s. These quantitative changes have been accompanied by qualitative changes: increasingly sophisticated weapons technologies, different types of conflict, a change in the structure of demand, and industrial restructuring with waves of concentration. The 2008 financial crisis seems to have ushered in a new phase in the defence market. Stimulus packages initially spared this type of expenditure, but since 2010-2011, defence budgets have been slowing in the USA and in European countries, due to debt constraints and the effects of budgetary rigour.
In this context, today's presentation will seek to show how research in Defence Economics can be useful in understanding and accompanying these changes, and how the Chair in Defence Economics intends to play its part.
The Economics of Defence
Defence Economics applies the concepts and tools of economics to defence issues. The topics covered are numerous: arms race models, alliance theory, growth and defence, economics of military personnel, contract theory, economics of disarmament and conversion, arms trade, economics of conflict, economics of the DTIB, etc.
In particular, Defence Economics has sought to understand how an output can be produced from different combinations of inputs, taking into account the cost structure, market characteristics, externalities and external relations. The output of this defence activity is difficult to measure. For many economists, this output will be peace and security, while other authors add power and independence.
Different combinations of inputs can achieve the same level of peace and security for a country or coalition. The economic literature has studied these different elements - R&D, military equipment, MCO, manpower - but there are still many research questions. The study of cost structures, markets (competition or concentration), modes of governance (private or public) and institutions has also provided a better understanding of the trends observed and enabled us to begin to evaluate the different systems.
Finally, the economic impact (direct or via externalities) of defence activity is a major research theme. What are the links between civil and defence research? What impact does defence research have on business and employment? What role do SMEs play? At a time when exports appear to be essential in the LPM, what is the current state of knowledge?
By analysing and presenting the economic literature on the subject, we will be able to show that despite the progress made in defence economic analysis, a number of major questions remain unanswered.
The Defence Economics Chair
Today, defence economics, particularly in France, remains under-represented and under-structured, and there is a relative lack of economic analysis of defence. At the same time, economics has evolved considerably in recent years. We have witnessed a decompartmentalisation and the emergence of a richer but also more consensual conception of economic analysis (JP Pollin). Technological advances have brought data and computing power within the reach of individual researchers. The increasing specialisation of researchers has led to a need for research coordination.
It is against this backdrop that the Defence Economics Chair project was launched. Its objectives are to federate and disseminate defence economics thinking and to produce benchmark academic research.
The first role of the Chair will be that of facilitator. On the one hand, we will seek to make the Chair a network leader, identifying researchers and their specialities in Defence Economics at national and international level, coordinating the network and disseminating information and knowledge. Secondly, we want the Chair to become an interface between research in defence economics and research in other fields of economics, as well as between the academic and professional worlds.
The second role of the Chair will be a production role. We will contribute to the production of academic articles on defence economics through the publications of the Chair's researchers. We will provide external researchers with knowledge of the specificities of the defence field and the possibility of carrying out applied studies. Finally, the organisation of working groups with researchers from the network will enable us to stimulate defence economics research in the scientific community.
The Chair's work will be disseminated in the form of articles, working papers, conferences and presentations at training courses, and will help to inform public and private decision-makers.
