Defense contractors play an essential role in US security operations. Among other responsibilities, contractors manufacture arms, manage logistics, analyze intelligence, and carry out cybersecurity operations. Historically, defense contractors were either publicly traded corporations or privately owned companies. The past two decades, however, have seen a major shift in the ownership structure of the US defense industry. Private equity firms—once niche actors in the US national security marketplace—have carried out over 1,500 deals involving defense contractors since 2000. This study employs a mixed-methods research design to assess the effects of private equity investment on the financial stability of the US defense industry. Using data on over 8,000 defense contractors, the inquiry finds that contractors with private equity backing experience bankruptcy at higher rates than contractors with no prior private equity investment. In addition, the study evaluates private equity activity in the military satellite services market—a field of growing importance in the strategically important domain of outer space. The inquiry’s findings have notable international security implications. Given the US’ role as a lynchpin in numerous alliances around the world, higher rates of bankruptcy among defense contractors have the potential to affect the security of the United States and its allies.

O artigo examina a ascensão e a queda da empresa Engesa-Engenheiros Especializados, especialmente entre 1974 e 1990. O artigo é resultado de pesquisa com fontes documentais recentemente desclassificadas pelo Arquivo Nacional. A documentação consultada sugere que, na fase de ascensão, a Engesa foi impulsionada por uma eficiente vinculação entre indústria de defesa, exportação de armamento e política externa brasileira, principalmente durante os governos burocrático-autoritários de Ernesto Geisel e João Figueiredo. Entretanto, fragilidades financeiras e administrativas, junto a uma infrutuosa e dispendiosa tentativa de salto tecnológico, acabaram colocando a empresa em uma situação insustentável, conduzindo finalmente à sua queda e falência no início da década de 1990. A experiência da Engesa constitui um exemplo significativo nas pesquisas sobre inovação tecnológica, estudos estratégicos e relações internacionais.

The aim of this study is to analyze the impact of the political violence during the Arab Spring on the stock market return of international defense firms. The direction of this impact is not directly straightforward as the civil unrests influence the expectations of investors in two opposite ways. On the one hand, investors might expect that when the peaceful demonstrations were turned into violent events, the Arab governments involved will start acquiring more military-strategic goods to repress the protests or send a strong signal of power to ensure their stay in office. However, on the other hand, when the popular protests escalated, investors, perhaps, became more concerned about the possible imposition of international military sanctions against the Arab Spring countries to restore peace and protect human rights. The main empirical findings of a dynamic panel model clearly confirm this pattern and point out that when the Arab Spring originated, the abnormal return of international defense stocks starts to rise immediately. However, in the course of time, the concerns of the introduction of arms embargoes become stronger and eventually start to dominate, causing the abnormal return to fall again, while the idiosyncratic risk began to fall due to enhanced diversification. It turns out that firm-specific factors can explain a substantial part of the effect found. For instance, the reaction of investors to the Arab Spring is significantly larger for firms that produce predominantly military goods.

In response to US plans to withdraw troops from South Korea in the 1970s, the Park Chung Hee administration (1961–79) leveraged all defense-related civilian industries to build an independent system of weapons production. In keeping with Park's advancement of military modernization driven by strong private-sector growth, an agenda that he promoted with his banner slogan “rich nation, strong military,” large Korean companies known as chaebŏl were transformed to serve as government contractors that drove both national economic development and military modernization. A case study of one such company, Hanwha, illustrates how the state's hyper-militarization of Korean industries determined the distinct course and character of South Korea's national development. The study highlights the dynamic interplay that occurred between state actors and private-sector CEOs, managers, and laborers in shaping the chaebŏl-centered economic and defense industrialization.

Technological ties between Israel and China have always been a central and constant element of their relationship. Defense contracts played a leading role here but were also responsible for the severe crisis that erupted between the countries in the early 2000s after Israel, capitulating to US pressure, backed off from its commitment to provide China with military technologies. This not only forced Israel to sever its defense relations with China but also made US-Israel relations a principal factor in the Sino-Israeli connection and imposed tight constraints on Israel's technology transfers to China generally. For Israel, this placed the dilemma of commercial versus political and national security interests at the forefront, since technology connections allowed it to promote its economic, political, and strategic causes through China. Indeed, while technology ties between the states have not stopped entirely—they have shifted to the civilian sphere—technology transfers to China are subject to heavy limitations, and Israel's export control mechanism faces greater challenges to screen them. As China's economic and political influence is ever increasing, Israel's cautious approach to technology transfers to China may be expected to come under mounting pressure.