The Political Economy of Military Industry Reform

Ownership and management of defense industry enterprises affords the military power, autonomy, and a claim to economic rents. Why do some countries successfully transfer some or all of these enterprises from military to civilian ownership and management while others fail? This study stresses the joint role of the balances of coalitional and institutional strength between civilians and the armed forces. Civilian and military must surmount obstacles in order to translate their preferences into policy. They must find party and executive allies who can compete on their behalf to craft or defeat legislation that affects their interests, and they must create or develop bureaucratic agencies that can design policy efficiently and effectively. Coalition formation and institution creation become crucial, especially in fragmented polities. When civilians can forge a stronger legislative coalition and can create a defense industry bureaucracy that is stronger than the existing military bureaucracy, enterprises will be transferred; when the military can forge a stronger coalition and maintain a relatively stronger bureaucracy, reform will stall. Firms will be partially transferred when the civilian bureaucracy is stronger but the military coalition is stronger. How civilian and military coalitions and institutions behave and interact and how they form, ossify, or fail to develop is assessed through a comparative analysis of Argentina (1983–1989), Argentina (1989–1997), Chile (1990–2018), Turkey (1983–2018), and Portugal (1976–2018)