In light of Section 881 of the National Defense Authorization Act for Fiscal Year 2017, which expanded the legal definition of the National Technology and Industrial Base (NTIB) to include the United Kingdom and Australia, this report informs NTIB partners on barriers and opportunities for effective integration. The expansion of the NTIB is based on the principle that defense trade between the United States and its closest allies enables a host of benefits, including increased access to innovation, economies of scale, and interoperability. In order to reap the greatest benefits of a new era of NTIB, this report uses the lessons learned from study of the present state of integration to identify areas of opportunity for policy reforms and greater cooperation.

Defence Industries in the 21st Century explores the transformation in the global defence industrial production through examining the interaction between international and domestic factors. With the global defence industry and arms market likely continue to expand and mature, the ways in which this progression could influence international politics remain obscure. In practice, as the contents of this book show, the defence industrial bases and arms export policies of emerging states display significant variance. This variance is the result of a unique balance between domestic and international factors that has shaped the defence industrialisation behaviour and policies of the less industrialised states. One of the most important conclusions of the book is that the interplay between domestic and international factors clearly influences the variation in the emerging states’ defence industrialisation policies, as well as their success or failure. While international factors create opportunities, they also limit the options available to emerging economies. Domestic factors also play an important role by shaping the policy choices of the states’ decision makers. Exploring the balance between international and domestic factors and the ways in which they influence defence industrialisation in emerging states, Defence Industries in the 21st Century will be of great interest to scholars of Defence Industries, Arms Manufacturing, and Defence, Strategic and Security Studies more generally. The chapters were originally published in Defence Studies, Comparative Strategy and All Azimuth.

The US and international defense industrial sectors have faced many challenges over the last twenty years, including cycles of growth and shrinkage in defense budgets, shifts in strategic defense priorities, and macroeconomic volatility. In the current environment, the defense sector faces a combination of these challenges and must struggle with the need to maintain critical aspects of the defense industrial base as defense priorities change and as defense budgets reduce or plateau. Moreover, the defense sector in the US is interconnected both with defense sectors in other countries and with other industry sectors in the US and global economies. As a result, strategic decisions made in one defense sector impact the defense sectors of other countries, as well as other areas of the economy. Given her academic, corporate, and Department of Defense experience as a leading economist and policy-maker, Dr. Nayantara Hensel is perfectly positioned to examine the interrelationship between these forces both historically and in the current environment, and to assess the implications for the future global defense industrial base.

... this is a case study of the process by which a strategy was developed and applied within the present American defense establishment ... bearing in mind the broad aspects involved in the rational development of a strategy through an understanding of national aims, technological and geographical constraints, and relative military abilities.

The United States’ National Technology and Industrial Base (NTIB) is a congressionally-mandated policy framework that is intended to foster a defence free-trade area among the defence-related research and development sectors of the United States, Canada, Australia and the United Kingdom. To date, however, the NTIB has only managed to facilitate limited bilateral cooperation between some members, falling well short of its goal. The US defence export control regime is one of the biggest barriers to NTIB integration. Specifically, bureaucratic fragmentation, its failure to treat trusted allies differently from other partners and its leaders’ reluctance to attempt politically costly reform are significant barriers to progress. Canberra’s ability to maintain its own competitive military advantage and to serve as an effective ally of the United States in the Indo-Pacific is threatened by real and growing opportunity costs in an age of rapid strategic and technological change that Australia and Australian industry face as a result of slow NTIB implementation. Australian leaders should elevate NTIB progress to the political level and accelerate efforts to make a strategic case in Washington as to why extensive and ambitious implementation of NTIB’s original vision is urgently needed.