adaptability of the French armaments industry in an era of globalization, The

Industry and Innovation, Aug 2001 by Serfati, Claude

Public R&D contracts (military and civilian) are concentrated in two industrial sectors, with the aerospace and the equipment sector (the latter being a broad category that includes telecommunications and defense electronics) accounting for over 85 percent of the total. The aerospace sector receives 46 percent of the military R&D contracts and 72 percent of the civilian contracts, while the equipment sector receives 42 percent of the military and 16 percent of the civilian contracts. Finally, geographical distribution is also strongly concentrated, with the "Greater Paris" region receiving 52 percent of the total amount of R&D contracts, while accounting for only 16 percent of the total domestic industrial output and 32 percent of the French arms production (de Penanros and Serfati 2000).

There is little doubt that this over-concentration of public R&D funds in a handful of industrial groups, all of them with defense industry-related activities, brought about dramatic consequences on the shaping and dynamics of France's technology policy A way to explore technological performances is through a patent deposit analysis.

Defense contractor groups and national technological performance

We turn now to the relation between the over-concentration of governmental R&D funding in a handful of industrial groups, all of them with defense industry-related activities, and national technological performances. During the 1980s, when military spending and R&D expenditures reached an apex, the arms industry was viewed by representatives of the arms meso-system as "an engine for industrial development" (Minister of Defense Giraud in 1987), and as "a propeller for technological development" ("un entraineur technologique") (CGP 1993). Such claims bluntly overstate what actually happened. During the 1980s, while the arms industry benefited from strong support and reaped significant trade surplus in arms trade, the manufacturing trade balance was heavily negative. To give the (significant) example of the electronic industry, we have shown that the negative balance of trade in electronics goods, could not be dissociated from the fact that the military has had priority in fixing the industry's R&D and industrial objectives (Serfati 1995).

There is no doubt that Defense Prime contractors enjoyed good export performances throughout the 1980s and 1990s. They benefited from buoyant arms exports, thanks to a strong dedicated governmental policy. Most Defense Prime contractors also increased their exports of commercial products which were developed from their technological expertise and organizational capabilities used in the defense business. An outstanding case is Aerospatiale, which drew upon wide similarities between military and commercial aircraft and succeeded in commercial markets with Airbus. Also, Thomson-CSF delivered civil products based on signal processing and information system integration technologies, which were both developed for weapon systems. Nevertheless, the success met by defense contractors in commercial markets can be found mainly in sectors close to their military activity (generally in "strategic industries" as defined above) with the consequence that they go on being dependent upon public funds if they are to perform a high level of R&D activities. As a result, the strong public support given to defense contractor groups through major technological programs reinforced the tendency of France's trade to be heavily dependent on large companies, a fact that did not dramatically change during the 1990s. Independent companies (i.e. not capital-owned by a holding corporation) trailed far behind industrial groups as far as exports are concerned (de Caix 1997).