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The traditional view of the defence industry obtaining large profits from contracts with the Ministry of Defence relies on several assumptions. Among these are the use of such arrangements as an instrument of industrial policy, the strong market power enjoyed by prime contractors, and the inefficiency encouraged by the sector. The findings show that defence contracts have a positive effect on profits, as well as the prizes for innovation and the market power enjoyed by some defence subsectors.Defence industry, Defence procurement, Profits, Spain,

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No abstract

Over the last two decades, a great number of studies have focused on the explanation of trade performance based on technological factors, including various studies on technology gaps. The aim of the present paper is to extend this empirical approach to include some additional factors including the role of policies, considered here as part of the explanation together with the traditional cost and technology variables. In this vain, the analysis is carried out for countries’ trade performance differentiating by foreign markets. It is expected that traditional variables included in previous technology gap analysis and variables expressive of policies will have different effects on the countries’ trade performance when different markets are considered. Empirical tests are made for the trade performance of a set of European countries—namely Spain, France, the UK and Italy—during the time period from 1987 to 1997.