Keith Hartley - NATO Arms Co-operation: A Study in Economics and Politics

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ROUTLEDGE LIBRARY EDITIONS: COLD WAR SECURITY STUDIES

Volume 29

NATO ARMS CO-OPERATION

First published in 1983 by George Allen & Unwin (Publishers) Ltd

This edition first published in 2021

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

52 Vanderbilt Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

1983 Keith Hartley

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-0-367-56630-2 (Set)

ISBN: 978-1-00-312438-2 (Set) (ebk)

ISBN: 978-0-367-61015-9 (Volume 29) (hbk)

ISBN: 978-1-00-310288-5 (Volume 29) (ebk)

Publishers Note

The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.

Disclaimer

The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.

NATO Arms Co-operation: A Study in Economics and Politics

KEITH HARTLEY
Department of Economics, University of York

Keith Hartley 1983

This book is copyright under the Berne Convention. No reproduction without permission. All rights reserved.

George Allen & Unwin (Publishers) Ltd,

40 Museum Street, London WC1A 1LU, UK

George Allen & Unwin (Publishers) Ltd,

Park Lane, Hemel Hempstead, Herts HP2 4TE, UK

Allen & Unwin Inc.,

9 Winchester Terrace, Winchester, Mass 01890, USA

George Allen & Unwin Australia Pty Ltd,

8 Napier Street, North Sydney, NSW 2060, Australia

First published in 1983

British Library Cataloguing in Publication Data

Hartley, Keith

NATO arms co-operation.

1. North Atlantic Treaty Organization

2. Arms and armor

I. Title

623 .091822UA646.3

ISBN 0-04-341022-7

Library of Congress Cataloging in Publication Data

Hartley, Keith.

NATO arms co-operation.

Bibliography: p.

Includes index.

I. North Atlantic Treaty Organization. 2. Munitions

- Standards. 3. Munitions - Cost control.

4. Disarmament - Economic aspects. I. Title.

II. Title: N.A.T.O. arms co-operation.

JX1393.N67H37 1982355.03109182182-16285

ISBN 0-04-341022-7

Set in 10 on 11 point Times by Rowland Phototypesetting Ltd

Bury St Edmunds, Suffolk

and printed in Great Britain by Billing & Sons Ltd, London & Worcester

Contents

1 The Policy Issues: An Overview

Introduction: what is the policy problem?

The methodology of economic policy

Defence choices and NATO

The political market place

The objectives of standardisation policy

Market failure as a cause of too little standardisation

Standardisation, two-way streets and MOUs

The economics of politics and MOUs

Conclusion

2 The Economics and Politics of NATO

Introduction

NATO as a defence club

The economics of military alliances

The political market and NATO

The threat from the Warsaw Pact

Defence burdens

Weapons costs

NATO standardisation: institutions and achievements

Is there a case for competition and free trade?

Conclusion: the need for evidence

3 Standardisation: Theory and Evidence

Introduction

What are the sources of cost savings?

The model: economies of scale and gains from trade

How reliable is the evidence on scale economies?

Evidence on scale economies

What is the evidence on comparative advantage and gains from trade?

Conclusion

4 Standardisation Policy: A Critique

Introduction: some problems

What are the assumptions of the model?

Weapons standardisation and industrial policy

A framework for choice

Jobs, technology and balance of payments benefits: the case for nationalism?

Conclusion

Part II AEROSPACE

5 The Research Design

Introduction: aims of the research

Why study aerospace?

The costs of alternative policies: a simple model and complications

Research methodology

Conclusion

6 Free Trade versus Nationalism

Introduction

The economics of aircraft R & D and manufacture

Market structure and performance

The size of firms

The efficiency of the American and European industries

Learning curves, output and costs

Is competition possible?

Fears of a US monopoly: dependence and the price of spares

Competitive prototyping and a fly before you buy policy

The preferences of producers

Conclusion

7 Licensed Manufacture and Co-production

Introduction: sharing production work

Definitions and examples

Why do firms co-produce?

The costs of licensed production and co-production

How valuable are the benefits?

Conclusion

8 Joint Projects

Introduction: standardisation and collaboration

The case for a European aerospace industry and examples of collaboration

The central hypothesis

Some methodological problems

Alternative assumptions on joint projects

The case for joint European projects

Departures from the ideal case: some inefficiencies

The case against European collaboration

How can the arguments about joint projects be evaluated?

Conclusion

9 How Can Joint Projects Be Evaluated?

Introduction: alternative criteria

The views of firms on the benefits and costs of joint projects

Performance indicators for joint projects

The organisation of joint European projects

Collaboration and the political market

Conclusion

10 Conclusion: Some Policy Guidelines

Guidelines for competition

Guidelines for a limited change (improvement)

Closing remarks

Appendix A Survey of European and US Firms: A Summary of Responses to a questionnaire

Appendix B Joint Projects: Summary of Responses to a questionnaire

1. 1 The Policy Issues: An Overview
   1. Introduction: what is the policy problem?
   2. The methodology of economic policy
   3. Defence choices and NATO

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