Defence economics: core issues and relevance to the Malaysian context

Abstract

Admittedly the emphasis on defence economics is a relatively new feature in public sector management but it is gaining importance as the high cost of defence procurement and the need for greater accountability raises many questions. Traditionally defence matters have been seen as the 'sacred cow' that one does not discuss openly for fear of being branded as being inappropriate. However this is attitude is changing. Policy makers and legislators require greater transparency and accountability in defence matters and issues like 'guns vs butter' and 'make or buy' need to be revisited. Defence economics is essentially the application of economic analysis to national defence related issues leading to the systematic evaluation of competing alternatives. This paper will attempt to underscore the need for analysis of the alternative choices available in both in the formulation of defence policy and its implementation. This is particularly so as defence modernization and capability development is extremely expensive both to acquire and maintain thus resulting in it being a subject of much scrutiny. Thematically the paper will stick quite closely to the the following defence economics issues facing our nation: • The 'Demand for Defence' debate. • Defence and a case for sustainability in economic growth and development • 'Make or Buy' issues • Military manpower development in the context of the national pool of trained and competent talent