The Internationalization of the Arms Industry

In the current environment of excess capacity in the arms industry in combination with a continuing trend of rising research and development costs in this sector, companies have become increasingly active in attempting to apply strategies of internationalization to arms-producing activities. At the same time, the end of the Cold War has led to a relaxation in government attitudes toward military technology transfers within a broad group of industrialized countries. This article discusses three basic forms of internationalization: exports, foreign direct investment, and international cooperation arrangements. Cross-border merger and acquisition activities are mainly concentrated in Western Europe, in particular in the aerospace and electronics sectors, but there are also examples of international restructuring outside these areas. International cooperation projects with the Russian arms industry have been limited in number and scope, due to their uncertain future prospects.