The Strategic Shift Towards Export-Focused Defense Industries

Nowadays, more and more countries have progressively set their defense industries toward exports. A number of economic, strategic, and operational factors give rise to this trend, which underscores the importance of military exports in view of maintaining a viable defense industrial base. This article discusses reasons for such a phenomenon, as well as multifaceted forms of benefits linked to an export-oriented defense approach.

Transition to export-oriented framing of the defense industries is also well-documented in today’s literature where many studies examine why such a transition could be economically, strategically, and operationally feasible. Indeed, studies point out that countries, especially in the post–Cold War period, have been restructuring their defense sectors to keep themselves competitive and in pace with the shrinking national budgets for defense. For instance, it has increasingly looked at exporting as a source of stability in revenues for both employment and economies of scale to support defense companies.

Economic Incentives for Defense Exports

One of the very powerful points of attraction for countries towards exports of defense is the potentiality of great economic benefit. With the defense budgets lowering at an alarming rate -especially within the United States, where the DoD is forecasted to throttle its spending- defenses manufacturers must seek other sources of income. Straight and Peterson (1993) list the strategies’ which U.S. defense firms use to compensate for their country’s losses in terms of national income because of these military export sales- like, the multimillion-dollar sale of their F-16 jet fighters to Taiwan amounting to $5.8bn, or the Sales of F-15s to Saudi Arabia reaching an amount value of $9 billion. The ability to export, however has implications on a defense firm’s operational stability and security of jobs.

Additionally, defense exports can generate economies of scale, whereby the unit production costs are decreased by the producers. Крицкая (2023) states that the possibility to raise the output volume of merchandise through the export path enables the spreading of fixed costs across a wider output, enhancing cost efficiency. It is this cost decrease that is…