Weapons and technology: the economics of Augustine weapons systems

Abstract

Augustine weapons systems are a new class of weapons which are high technology and costly with their unit costs rising between successive generations reflected in inter-generational cost escalation. They have potential for revolutionary change in a nation’s armed forces and defence industries. In the same time frame, another new technology is emerging in the form of cheap drones replacing manned aircraft. Both of these new technologies are assessed in terms of their likely impact on military forces and defence industries. Augustine weapons systems are defined and their substitution effects are identified. There will be opposite effects on industry output, with costly Augustine systems bought in smaller quantities and cheap drones in larger volumes. Evidence is presented on cost escalation for a sample of UK fighter aircraft.