Life distribution analysis based on Lévy subordinators for degradation with random jumps

For a component or a system subject to stochastic degradation with sporadic jumps that occur at random times and have random sizes, we propose to model the cumulative degradation with random jumps using a single stochastic process based on the characteristics of Lévy subordinators, the class of nondecreasing Lévy processes. Based on the inverse Fourier transform, we derive a new closed‐form reliability function and probability density function for lifetime, represented by Lévy measures. The reliability function derived using the traditional convolution approach for common stochastic models such as gamma degradation process with random jumps, is revealed to be a special case of our general model. Numerical experiments are used to demonstrate that our model performs well for different applications, when compared with the traditional convolution method. More importantly, it is a general and useful tool for life distribution analysis of stochastic degradation with random jumps in multidimensional cases. © 2015 Wiley Periodicals, Inc. Naval Research Logistics 62: 483–492, 2015     

Estimated UK employment dependent on ministry of defence expenditure and defence exports

The Ministry of Defence (MOD) has published estimates of the number of average full‐time UK industry employees dependent on MOD expenditure and defence exports for a number of years. This paper provides the outcome of a recent review of the process used. The method of deriving MOD and defence export final demand vectors, and calculating from these estimates of direct employment (i.e. that in supplying companies) and indirect employment (i.e. that incurred through the supply chain) are described. Difficulties with the data are explored. Alternative approaches, methods used in other countries and challenges posed by changing MOD administrative systems are briefly discussed.     

Ridge regression analysis of the defence‐growth tradeoff in the United States

An examination of past analyses suggests that today's sailors may be less responsive to compensation changes than previous generations. Such a change could make recruiting and retaining high‐quality sailors more difficult. However, variation in researchers' decisions over time may simply have created the appearance of such a change. Our results suggest there is little variation in the pay elasticity over time. In contrast, the different reduced‐form models we use to measure this relationship can explain most of the variation in the literature. Therefore, the evidence suggests that while sailors may have changed over time, their response to compensation has not.     

Military Debt: Perspectives from the Experience of Arab Countries

The sectoral production function model of Feder (1983) has been widely used to examine the link between defence spending and economic growth. In this paper, the model, for which too much has been claimed in some past work, is examined, and the case is made for using growth in real non‐defence output rather than growth in real aggregate output (inclusive of military spending) as the dependent variable. Attention is restricted to a small group of OECD countries for which reliable labour force and capital stock (as well as defence) data are obtainable. With non‐defence output as the dependent variable and using only high quality data, no evidence in favour of the underconsumptionist (as opposed to the defence as a burden) position is found.     

Book review

La Conversion économique du secteur militaire, J. FONTANEL, Economica, Paris, 1994, pp. 112. Paperback. ISBN 2–7178–2650–5.     

THE ‘PRICE’ OF TERRORISM

Security measures are said to increase the price of terrorism. This price has not been hitherto defined in an economically meaningful way. This paper provides a precise definition by treating the terrorists’ resource endowment as a parcel of contingent claims to political influence with a price equal to the summed value of those contingent claims in potential states of the world. Equipped with this definition, an equilibrium model of the price of terrorism is deployed. Important insights are gained into the effect of terrorists’ risk aversion at the level of the price of terrorism in different states of the world and the theoretical conclusion is reached that higher security is associated with a lower price of terrorism rather than a higher price. The implications for policy are discussed.     

Country Survey XIII: Japan's security posture and defense industry prospects

Defense budgets in Japan have been complicated compromises from numerous inputs ‐ including threat perceptions, domestic industrial/technological base development, support for the bilateral security treaty with the United States and internal bureaucratic politics ‐ but with the fall of the former Soviet Union, the clearest justification for higher spending disappeared. Double‐digit defense spending increases that were common in the 1980s have been replaced by annual increases lower than present inflation rates, resulting in negative real growth in the country's defense budget. Domestic economic problems and consistent government pressures for smaller budgets have further slowed annual growth in total spending and have contributed to lower procurement budgets. As a result, the domestic Japanese defense industry is facing far more constrained conditions from the growth years of a decade before.

Government policymakers are examining Japan's regional security environment as well as its alliance with the United States to determine the appropriate course for the country to take in the coming years. The formal security treaty with the United States is likely to remain a major element of government positions, but other aspects of the country's overall security posture are open to debate. Perceptions of a reduced threat environment are fueling additional pressures for defense budget cuts.

The domestic defense industry seeks means to assure its survival in domestic defense markets in this constrained environment. Expansion into overseas markets to offset declining domestic markets is an option that currently is constrained by policy restrictions on arms exports. Industry is advocating re‐examination of those policies and unlike earlier years, government appears willing to respond positively but cautiously to this lobbying.     

Corporate performance and military production in South Africa

With the end of the Cold War and apartheid, a process of demilitarisation and dramatic cuts in military spending has marked the transition to democracy in South Africa. Between 1989 and 1997 the South African defence budget was cut by more than 50% in real terms, with most of the cuts coming from the procurement budget, which was cut by nearly 70% in real terms during the same period. These cuts have had a significant impact on the country's defence industrial base. However, there has been surprisingly little research on the changes to defence companies that have taken place since the late 1980s. This paper makes a start at rectifying that deficiency by providing an analysis of the restructuring of the major defence‐dependent companies over the period 1988–97. It uses a number of financial ratios and other measures of corporate performance to compare their experience with non‐defence companies in the rest of the South African economy during the same period.