Measuring defense conversion in Russian industry

Abstract

This paper develops and implements a methodology for quantifying defense conversion in Russian manufacturing in the early 1990s. A two-sector, three-good model is employed to analyze the flows of resources from military to non-military uses and applied to firm-level survey data under alternative definitions of military production and the MIC. An aggregation framework is constructed to estimate the total quantity and change in Russian military production, the latter decomposed into intrafirm and intersectoral resource reallocation and overall industrial decline. Although there is evidence of substantial decline in military production, the data show little reallocation to productive civilian uses, neither within the MIC nor to other manufacturing sectors.Conversion, Demilitarization, Military-industrial complex, Military production, Restructuring, Defense industry, Russia,

Market Competition and Firm Performance in Russia

“…A related issue concerns the particularly severe restructuring difficulties faced by the military-industrial complex (MIC). Firms in this sector experienced an enormous fall in demand for their military output in the early 1990s, but they have had little success in converting to civilian production (Earle and Komarov, 2000). Perhaps this is not surprising, as defense conversion is a difficult task even in well-functioning economies such as the United States.…”