Chapter 4 Arms export controls and the proliferation of military technology

• Date: 08 July 2010
• DOI: https://doi.org/10.1108/S1572-8323(2010)0000014008
• Published date: 08 July 2010
• Pages: 53-68
• Author: Peter Hall,Robert Wylie

CHAPTER 4

ARMS EXPORT CONTROLS AND

THE PROLIFERATION OF

MILITARY TECHNOLOGY

Peter Hall and Robert Wylie

ABSTRACT

Purpose – To examine the implications of arms export controls on the

international spread of weapons production and innovation.

Methodology/approach – The chapter analyses predicted responses to

arms export controls, drawing on existing literature.It considers incentives

to potential buyer countries to develop their own substitutes and a case

study of Australia’s response to US denial of access to electronic warfare

self-protection (EWSP) technology for f‌ighter aircraft.

Findings – Spurred by the US denial of access to relevant EWSP,

Australia devoted many years to developing a homegrown substitute.

Although Australia achieved some success, the United States ultimately

granted Australia access to the technology. Australia then abandoned

research, design and development (RD&D) on EWSP for fast jets in

2009. Cause and effect remain a matter of debate.

Research limitations/implications – Insight into the real-world value of

the theory is limited by the use of a single case study. Such cases supported

by publicly available information are, however, scarce. Countries seeking

Economics of War and Peace: Economic, Legal, and Political Perspectives

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ISSN: 1572-8323/doi:10.1108/S1572-8323(2010)0000014008

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to circumvent export controls must expect to incur high costs and

uncertain outcomes.

Practical implications – Policy-makers should be wary about committing

large budgets in developing substitutes for new technologies denied them

through export controls. Such efforts may, however, offer the possibility

of putting suppliers under pressure unavailable from other actions.

Social implications – Arms export controls designed to limit proliferation

of weapons create incentives for states to develop their capabilities for

new arms production and to develop new weapons-related knowledge.

Originality/value of the chapter – This chapter provides a new case study

which illustrates an innovative approach to arms export control analysis.

INTRODUCTION

Arms control continues to be a key focus in the study of defence and peace

economics (see, e.g. Smith, 2009). Export controls designed to stif‌le the

international proliferation of arms can, nonetheless, create pressures that lead

to an even more undesirable outcome – the m ore widespread development,

internationally, of military production and innovation capabilities. Denied

direct access to the military assets they seek, countries have an incentive to

invest in the capabilities required to m ake the weapons for themselves. Formal

economic analysis has pointed to conditions under which c ountries will invest

to undertake domestic production in the presence of arm s export controls

(Levine & Smith, 2000;Levine, Mouzakis, & Smith, 2000), but that work

offers only limited analysis of the range of possible responses to arms export

controls. And in taking research, design and development (RD&D)

expenditure as a proxy for innovation, it disguises the arduous and uncertain

nature of the process that countries must often pursue if they wish to develop

‘home-made’ substitutes for technologies they have been denied.This prevents

existing analysis from acknowledging that such uncertainty can lead to faulty

perceptions about the potential effectiveness of arms export controls.

In this chapter, we begin by outlining the range of choices open to a

potential recipient of new military technology to identify the range of

possible actions for a nation in this position. We then consider the

implications of these potential actions for suppliers and how the relationship

between recipients and suppliers might, under uncertainty, shape innovation

in military technology. We are, thus, able to analyse factors that determine

PETER HALL AND ROBERT WYLIE54