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1、SecurityChallengesTheEconomicsoftheUKDefenceIndustrialStrategyKeithHartleyIn2005,inanticipationofmajorgapsindevelopmentandproductionworkforBritishdefencesuppliers,theUKGovernmentreleaseditsmostcomprehensivestatementofpolicyforBritishdefenceindustrytodate.Atissueiswhichdefenceindust
2、rialcapabilitiestheUKwishestoretain,howtodoso,andatwhatcost.Thisarticleanalysesthenewpolicy’sapproachtocompetition,theweightgiventonon-defenceissuesinprocurementchoices,thepriceofUKindependence,andmanagingBAE’sdominanceofBritishdefenceindustry.IntroductionTheUKMinistryofDefence(MoD
3、)isamajorbuyerofdefenceequipmentandservices,spendingsome£16billionondefenceResearchandDevelopment(R&D),equipmentandsupportin2005.SuchbuyingpowerformsamajorcomponentofthedemandsideoftheUKdefenceequipmentmarket.Exportsofdefenceequipmentandservicesvaluedatsome£7.1billionin2005areafurt
4、hercomponentofmarketdemand.Forsomeequipment,MoDistheonly(monopsony)buyerpurchasingfromaUKmonopolysupplier(e.g.nuclear-poweredsubmarines).WhereMoDisamajororthemonopsonybuyer,itcanuseitsbuyingpowertodeterminethesize,structure,behaviour,performanceandownershipoftheUKdefenceindustrialb
5、ase(SeeTable1).MoDbuyingpowerformsthecontextfortheDefenceIndustrialStrategy(DIS).TheUK’s2005DefenceIndustrialStrategyWhitePaperisthemostcomprehensivestatementofdefenceindustrialpolicyeverpublishedbya1UKGovernment.ItprovidesdataontheUKDefenceIndustrialBase(DIB);itprovidesguidingprin
6、ciplesfortheStrategy;itoutlinestheproblemsfacingthedefenceindustries;anditidentifiesthekeyindustrialcapabilitieswhichwillberetainedintheUK.AnassociatedDefenceTechnologyStrategy2(DTS)waspublishedbyMoDin2006.ThisarticleevaluatestheDISintermsoftwoquestions.First,whatisknownabouttheUKD
7、IBanditsproblems;andsecond,whatarethekeyquestionswhichneedtobeaddressedinanycriticalevaluationoftheDIS?1MinistryofDefence,DefenceIndustrialStrategy,London,TheStationeryOffice,2005.2MinistryofDefence,DefenceTechnologyStrategy,London,TheStationeryOffice,2006.Volume3Number2(June2007)-
8、19-SecurityChallengesTheUK
