Conflict and Defence Output: An Economic Perspective

This article explores the economics of conflict and peace in the light of rising weapons costs and the costs of conflict. It addresses two questions. First, can nations afford wars; and second, what is defence output and can it be measured and valued? The article starts by outlining the economics of conflict and peace, conflict and defence spending and the impact of rising weapons costs. The contribution and limitations of economic theory in measuring defence output are reviewed. The economic and noneconomic benefits of defence output are presented. Traditionally, it was assumed that defence outputs were measured by inputs but there is now a focus on defence capabilities. Considerable problems and challenges remain in assessing defence output.