Assessing the importance of the European armament sector: a multiregional approach

Abstract

The threat posed by the war in Ukraine and the shift in the U.S. administration’s stance toward the European Union compel member states to cooperate in the armaments industry through co-production and co-development projects. This makes the present study particularly valuable for understanding the current state of the defence sector within EU member states.

Our study examines the situation of the armaments industry across EU member states, focusing specifically on intersectoral relationships and their multiplier effect on the economy. This approach enables us to assess the state of the defence sector and anticipate worst-case scenarios arising from the ongoing conflict in neighboring territories. Furthermore, it allows us to identify potential capability gaps within the defence sector.

To conduct this analysis, we employ a multisectoral and multinational modeling framework based on the input – output methodology, which enables the disaggregation of the armaments sector into its constituent subsectors, thereby facilitating the examination of income flows associated with this industry. The results obtained provide an in-depth understanding of both the weight of the armaments industry in the domestic economy of each EU member state and the impact of this sector on other economies through trade exchanges.