The Three Big Questions Of Defense-Industrial Strategy
What are the industrial base issues that need to be considered in any defense strategy? In this age of austerity in military spending, we are hearing calls for bolder policies that would break with past practice, rewarding companies for taking risks, and punishing those that fail. We hear assertions that defense ministries should think seriously about what capabilities they want to preserve as economic constraints force choices in future force structure, and, ultimately, strategy. We should applaud these efforts to highlight industrial considerations in formulating strategy, for the question remains fresh. But in thinking about formulating public policies in this area, I believe that an overarching framework is more important. I recommend orienting on three dimensions, each of which encompasses a spectrum of potential defense-industrial policies: Civil-military integration, or how much the industrial resources on which any defense ministry relies should be commingled with civil technologies and a commercial business base; interdependence, or how autarkic or globalized a nation should be in sourcing its weapons; and capitalization, or how much a nation’s defense-industrial resources rely on public or private investment.