Defence exports: A strategic imperative

A midst escalating geopolitical tensions, analysts foresee a rapid expansion of the global defence and aerospace industry, from $750 billion in 2022, to $1.38 trillion by 2030.

Beyond economic gains, defence exports offer substantial strategic advantages.

The deployment of defence equipment from a specific nation establishes technological dependencies, influencing maintenance, repair, overhaul, spares, components, and future upgrades. Compatibility between exporting and receiving nations enhances military interoperability, expanding options for joint operations.

These dependencies significantly impact the diplomatic and strategic geopolitical stance of partner nations, highlighting the broader implications and significance of defence exports.

The United States, currently the world's largest arms exporter with over 40 per cent of global exports, did not always dominate the market. In the 1870s and '80s, the American shipbuilding and strategic metals industry lagged behind Europe. Prior to the 1880s, the navy and war departments procured ships and armaments from the government naval yards and arsenals. Faced with the transition from wood-sail to steel-steam fleets, the US had to decide whether to import from Britain or encourage domestic production. They opted for the latter, legislating that all ships and components must be sourced domestically, fostering a private defence industry.

Along with this fundamental change, other key policy measures transformed the defence industry in the US. The Government Metal Testing programme subsidised industry testing cost, amendment to the basic procurement law allowed direct negotiation instead of competitive bidding in emergency conditions or when competition was impractical. Another landmark decision involved the State promoting foreign sales of US firms, arguing that it was crucial for maintaining the military-industrial complex for national defence.