| Summary/Abstract |
Few factors have a greater impact on the international distribution of power than states’ ability to develop and produce sophisticated weaponry. The Israeli and Swedish cases demonstrate the constraints and opportunities for small states’ defense-industrial bases in a globalizing world. The changing nature of arms production—including mounting weapons costs, globalized supply chains and the rise of multinational defense corporations—forced governments to reevaluate their defense-industrial policies. In each case, governments abandoned the pursuit of defense-industrial self-sufficiency and adopted export-dependent defenseindustrial policies. National strategies differ, however, with Sweden embracing foreign direct investment (FDI) to support incremental innovation and Israel encouraging companies to tap venture capital in pursuit of disruptive innovations. After a decade of sustained growth, the Israeli and Swedish defense-industrial bases today arguably suffer from structural weaknesses rooted in the adaptation policies each state adopted in prior decades and, more particularly, how each encouraged exports and drew on new forms of investment capital.
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