A Small Country Perspective
The previous three chapters have presented new empirical evidence on how defence firms are starting to respond to the future scenario of market liberalization, focusing on defence contractors and policy frameworks in small, open economies such as Norway and Sweden. The present chapter and the next will extend this analysis of the possible future impacts of market liberalization in the defence industry by means of simulation modelling analysis. Specifically, we will in this chapter present a theoretical model of the defence industry that resembles some of the main characteristics and empirical stylized facts that we have highlighted in this book so far. Chapter 6 will then present the results of simulation analysis intended to compare different policy scenarios for the future and the different impacts of liberalization in large and smaller European economies. The framework presented in this chapter is based on agent-based modelling (Dosi et al., 2010; Almudi et al., 2012; Ciarli et al., 2012). ABM has never previously been used to analyse the question of exporting firms’ reaction to market liberalization and, more specifically, it has never previously been applied within the context of the defence industry. A specific model of interest is the so-called SKIN model (‘Simulating Knowledge Dynamics in Innovation Networks’), introduced in a number of papers by Gilbert et al. (2007), Pyka et al. (2007) and Ahrweiler et al. (2011). This is an agent-based model that provides an accurate analysis of private firms’ interactions and knowledge dynamics in high-tech (or knowledge-intensive) industries.
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