Cross-border linkages and the US defense industry: outlook and policy challenges

Abstract

A new environment has emerged with the end of the Cold War that is shaping corporate and government decisions on defense spending. This will significantly reduce the US military establishment and will demand new approaches to ensuring sufficient future defense capabilities. These trends, along with changes in the technological and economic relationship between civilian and defense-related products, will shape and accelerate international links among firms in the world's future defense industry. Developments in the defense industry parallel a similar expansion of cross-national links among producers of civilian high-technology products. This paper examines trends in international collaboration within the US defense industry, and considers the implications of its rapid expansion for future policies designed to preserve the US ‘defense industrial base.’