Abstract
In 1989 the end of the cold war was brought about by diplomatic and political change. The defence industries, which had previously benefitted from stable and steadily growing military expenditure, were faced with a long term decline in domestic and world markets. While there were decreasing arms industries in the main supplier countries, other countries, particularly the emerging nations with growing economies, increased the level of arms production. The traditional arms suppliers competed to gain a market share in these countries and offered technology transfers, offsets and licensed production arrangements. The arms industrialists of the traditional supplier nations have become concerned that licensed manufacturing leads to countries eventually setting up their own production. The relationship between licensed and indigenous production of arms presented a fruitful area of research. The hypothesis investigated in this study was that: licensed production leads to indigenous production of arms. Three methods were used to test the hypothesis: (a) a macro-analysis of the numerical data collated on twelve countries' arms production over twenty five years, (b) four case studies of the arms production of ASEAN, Australia, Japan and Israel and (c) a survey by questionnaire of arms dealers and suppliers. Finally, validation interviews were carried out with a panel of experts on weapons production and arms trade who were asked to comment on the findings of the studies. All three studies gave the same result that the value of indigenous production is not a result of the value of licensed production of arms. The panel of experts found that the result of the studies corresponded to their understanding and experience of the arms industry: joint ventures and licensed production were used to establish a domestic arms industry but the impetus for setting up and carrying out both licensed and indigenous production came from strategic, political and economic motives and the socio-economic background of the particular country.