Defence Industry Restructuring: The End of an Economic Exception Paris : ifri, 1999. - 62 p. (Transatlantic series), (Notes de l'Ifri, No.15 bis)

The defense industry is no longer an exception in market economies and defense companies are faced with mounting competitive pressures. This normalization of the defense industry underlies the 1990s flurry of mergers, acquisitions and joint ventures in the US and Europe. 

This study shows that in the post-Cold War economic and technological context, the relative isolation of military national champions from civilian industries and from foreign competitors had become a liability. The search for efficiency, both in terms of production costs and in terms of innovation, argues for further integration of civilian and military productive capacities.

An industrial policy in the defense sector should include an effort to limit military specifications and constraints in order to foster this integration. The scope and effectiveness of the restructuring process depend in particular on this demand-side change, which influences firms' strategies, including European or transatlantic corporate alliances. Such alliances may contribute both to the competitiveness of defense production networks and to NATO's military readiness.

Frédérique Sachwald is the Head of Economic Studies at Ifri and a Professor at the University Paris Nord.

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