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Innovation and Liberalization in the European Defence Sector

A Small Country Perspective Fulvio Castellacci, TIK Centre for Technology, Innovation and Culture, University of Oslo and NUPI and Arne Fevolden, TIK Centre for Technology, Innovation and Culture, University of Oslo, and Nordic Institute for Studies in Innovation, Research and Education (NIFU), Norway
This book investigates the ongoing liberalization of the European defence market and explores how companies can respond to these changes by adjusting their innovation and internationalization strategies. Traditionally, the EU defence sector has been fragmented into several weakly integrated and highly protected domestic markets which often leads to the duplication of innovative efforts, rising production costs and an overall lack of competitiveness. Using a variety of methods including case studies, econometric analyses and agent-based modelling, the authors reveal that liberalization will provide new and relevant opportunities for European defence companies. However, any potential benefits will only be realized if private firms perceive that a full and well-coordinated implementation process is in place.
Extent: 176 pp
Hardback Price: $99.95 Web: $89.95
Publication Date: 2016
ISBN: 978 1 78347 787 6
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  • Economics and Finance
  • Economics of Innovation
  • International Economics
  • Innovation and Technology
  • Economics of Innovation
  • Innovation Policy
Traditionally, the EU defence sector has been fragmented into several weakly integrated and highly protected domestic markets which often leads to the duplication of innovative efforts, rising production costs and an overall lack of competitiveness. This book investigates the ongoing liberalization of the European defence market and explores how companies can respond to these changes by adjusting their innovation and internationalization strategies.

Using a variety of methods including case studies, econometric analyses and agent-based modelling, the authors reveal that liberalization will provide new and relevant opportunities for European defence companies. However, any potential benefits will only be realized if private firms perceive that a full and well-coordinated implementation process is in place. As a whole, the book provides an original assessment of innovation policy in the context of EU defence and security market liberalization.

In addition to those studying innovation, European and security studies, this unique book is an indispensible reference for practitioners and policy makers dealing with EU defence and security market liberalization.
‘The defence sector is a critical industry that is currently undergoing a phase of momentous transformation. Over the last twenty years, market liberalization, the growing instability of geo-political scenarios and rapid technological change have completely reshaped the structural features of this industry. Taking as a starting point the Norwegian case, Fulvio Castellacci and Arne Fevolden provide a very acute analysis of the main trends of evolution of the European defence industry. Their study makes good use of the latest insights emerging from the economics of innovation, international trade and industrial dynamics literature. One of the most innovative features of Castellacci and Fevolden’s approach is the construction of an industry-tailored agent based simulation model that permits the systematic exploration of different policy scenarios. Because of its broad scope and its original approach, this book is going to represent fundamental reading for all economists and political scientists interested in the defence industry for a long time to come.’
– Alessandro Nuvolari, Sant’Anna School of Advanced Studies, Italy

Contents: 1. Introduction 2. The Defence Sector and Industrial Policies: Background, Stylized Facts and the Liberalization Scenario 3. What Explains the Export Performance of Firms in the Defence Industry? 4. Defence Companies’ Response to EU Liberalization: A Comparative Study 5. A Simulation Model of the European Defence Industry 6. Policy Scenario Analysis: Small Countries in a European Perspective 7. Conclusions and Policy Implications Index