Abstract
This article addresses the relationship between European and U.K. defense industrial policy. It considers recent initiatives to create a European Defense Equipment Market and the U.K.'s Defense Industrial Strategy. The European and U.K. defense industries are evaluated and some of the future policy choices are assessed. The future defense firm will be different and there will be conflicts between efforts to open up national defense markets and the desire to maintain national defense industries.
Highlights
Notes: (i) Defense is based on the aerospace and defense group; (ii) companies are ranked by value added; (iii) all company composites for Europe are based on the top-700 European companies, with sales and value added as averages for the 700 companies and includes the top U.K. firms; for U.K. companies, averages are based on the top-800 companies; (iv) DTI does not publish similar data for the United States
The European Defense Agency has announced a policy on the future European Defense Technological and Industrial Base (EDTIB)
The Defense Industrial Strategy (DIS) confirms the relative openness of the U.K. defense market, where over 30 percent of Ministry of Defense (MoD) industrial spending was with foreign-owned companies, collaborative programs, and imports
Summary
Notes: Data for EU nations do not include EU members Cyprus, Ireland, Latvia, Lithuania, Luxembourg, Malta, and Slovenia. Defense industry employment is concentrated in a few nations with the United States accounting for 36 percent of the 2003 world total compared with 19 percent of the total in 1990. Such size differences between Europe and the United States and within the EU confirm the costs of national protection in Europe and the potential efficiency gains from a single EU Market for defense equipment.. European and U.K. aerospace and defense are relatively less profitable than the industry averages raising questions about their continued presence in what appears to be a relatively less profitable industry
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