Arms Sales and the U.S. Economy: The Impact of Restricting Military Exports by William D. Bajusz

Author:William D. Bajusz [Bajusz, William D.]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9780429713200
Google: hd6iDwAAQBAJ
Publisher: Routledge
Published: 2019-04-11T06:27:55+00:00

The Inventory Replacement Approach

This approach estimates prospective national demand for particular items principally based upon the existing equipment inventory and the likely time at which these items will become obsolete. Consequently, the initial analytic step is to establish the size of each nation's inventory of a particular item of equipment and the dates at which these items entered service. For analytic convenience, it is assumed that individual items will have a service life of about 20 years which will not be extended by any equipment upgrade programs. Establishing the date of entry into service and the approximate equipment life span permits the estimation of demand over a particular time period. To accomplish this it is only necessary to make assumptions about how many new equipment items will replace obsolescing equipment and when equipment deliveries will commence subsequent to a national procurement decision. For purposes of this analysis, it is assumed that aging equipment is replaced on a one-for-one basis and that the initial procurement decision precedes the first delivery by about three years.

The replacement inventory approach is not without its limitations. A major drawback — even if one can ascertain with accuracy the size and age distribution of an inventory, itself not a trivial task — is the total lack of any consideration of whether a given nation will be able to afford the acquisition program its current inventory implies. Related to the above, in many cases it is not entirely reasonable to assume that less expensive equipment upgrades (such as a modification package to modernize the fire control and weapons suite of a vintage tank) will not be acquired to forestall the need to purchase new and more expensive equipment. In fact, financial restraints have led many nations to replace equipment on less than a one-for-one basis or to rely on upgrade packages in lieu of costly, state-of-the-art weapons systems. Further, in the case of combat aircraft, some military establishments have found a mix of combat and trainer aircraft more attractive than one-for-one replacement of combat aircraft simply because they do not wish to subject highly sophisticated and expensive combat aircraft to the rigors of training activities. On the other hand, the inventory replacement approach does not reflect the possibility that a nation actually may be expanding its existing inventory. In fact, some Middle East states, notably Bahrain, actually may be in the process of expanding their inventories significantly. Notwithstanding all of these limitations, this forecasting technique nonetheless is intuitively appealing. Among many industry market analysts, it is the approach most frequently seized upon when a long-term projection of market demand is needed.

Table 5.1 portrays the results of applying the inventory replacement approach to the market for combat aircraft in Jordan and the GCC states. As indicated in the table, use of this approach would suggest that these countries collectively will decide to acquire 333 aircraft before the year 2000. It should be noted that the total estimate of demand excludes several likely aircraft replacement decisions. Oman's replacement of

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