Aerospace: The Political Economy of an Industry

Abstract

Aerospace is a leading, high-technology sector which is believed to be central to Europe’s future international competitiveness. It is research and development (R&D) intensive, requiring substantial inputs of human capital (e.g. scientific manpower), with potential technical’ spin-off’ for the rest of the economy. It is also involved in the newly-emerging market in space. Traditionally, it is an industry which has been dominated by government with its defence demands and a national desire for independence. Increasingly, however, there are some aerospace R&D projects where the minimum entry costs are so high that it is necessary for nations and firms to combine. Already, European aerospace firms are collaborating in military and civil aircraft, helicopters, missiles and space projects and such collaboration provides the basis for the eventual creation of a European aerospace industry. In addition, the desire for a’ peace dividend’ will mean smaller defence markets and an inevitable re-structuring of Europe’s defence-dependent aerospace industries. These trends towards international collaboration and re-structuring will be reinforced with the ECs emphasis on creating a single European internal market, including its possible extension to defence equipment.