Is there an alternative to trade restricitons that might make more economic sense?
We need defense industries, and we must protect them from import competition by placing restrictions on conpetitive imports, Is this statement true or false? Is there an alternative to trade restricitons that might make more economic sense?
Answer:
The notion of comparative advantage applies everywhere, including defense industries. This is reflected in the fact that most major bits of defense hardware (tanks, planes, missiles) are assembled with parts made in other countries.
Protecting local defense industry from competition and only buying domestically is a path to falling behind on defense technology.
A better way to keep local defense industries healthy would be to heavily fund R&D with government dollars in the most crucial areas, and then share that technology with domestic firms who will produce the most advanced and sensitive components of your defense hardware solely for domestic use.
if you are only talking about the defense industry then probably restrictions is the only way to go. This has nothing to do with economics and everything to do with secrets. The fact is you must trade-off cost, quality, and development, of defense goods with keeping control of the secrets.
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Answer:
The notion of comparative advantage applies everywhere, including defense industries. This is reflected in the fact that most major bits of defense hardware (tanks, planes, missiles) are assembled with parts made in other countries.
Protecting local defense industry from competition and only buying domestically is a path to falling behind on defense technology.
A better way to keep local defense industries healthy would be to heavily fund R&D with government dollars in the most crucial areas, and then share that technology with domestic firms who will produce the most advanced and sensitive components of your defense hardware solely for domestic use.
if you are only talking about the defense industry then probably restrictions is the only way to go. This has nothing to do with economics and everything to do with secrets. The fact is you must trade-off cost, quality, and development, of defense goods with keeping control of the secrets.
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