Chalmers, Malcolm, Neil V. Davies, Keith Hartley, and Chris Wilkison. "The Economic Costs and Benefits of UK Defence Exports." Fiscal Studies, Vol.23, No.3 (2002): 343-367.

Chalmers, Malcolm, Neil V. Davies, Keith Hartley, and Chris Wilkison. "The Economic Costs and Benefits of UK Defence Exports." Fiscal Studies, Vol.23, No.3 (2002): 343-367.

• The British government often justifies unethical arms exports on the economic basis that they supply jobs, foreign currency, and maintain Britain's independence defense manufacturing capacity (343-344).
• The authors discuss their methodology and data from page 344 to page 352.
• If British arms exports were halved, it would in approximately 48,570 lost jobs, or under 0.2% of British employment and much less than reduction during the 1990s. In this scenario, all laid-off defense workers are reemployed in other industries, arms prices go up to make up for a reduced sales base, and that the capacity of British defense manufacturers would decline. This would cause a temporary depreciation in the pound and a temporary reduction in quality of living, but these would be correctly quickly (352-353).
• These economic costs would disproportionately be borne by certain areas where the defense manufacturing industry is concentrated (354, 366).
• After undergoing a transition, the author estimate that half divestment in the defense industry would result in 67,000 new jobs would be created, albeit at lower wages than the 48,570 jobs lost due to the transition. The lower wages would also result in decreased spending and a resultant economic loss (356).
• The loss of tax revenue from the arms industry would be between £140 million and £180 million during the first year and between £380 million and £540 million during the entire period of adjustment. This would result an adjustment of the British pound's value, resulting in total increased trade revenues of between £2.1 billion and £2.5 billion (356-357).
• Research and development [R&D] spending in defense accounts for roughly 15% of total R&D in Britain. There are fears that a reduction in the arms industry could reduce investment and thus limited total R&D funding and the useful technological innovations it produces (357).
• Some argue that reduced concentration of R&D in the defense industry would actually produce greater innovation because it would free up additional capital for investment in more productive, innovative, and civilian-oriented sectors of the economy. This argument would appear to hold for the supply of highly-skilled researchers (357-358).
• A full tabulation of the costs and revenues associated with a half-reduction of British arms exports are provided between page 358 and page 365. The net cost of this reduction on the British government would be a reduction of between £40 million and £100 million in annual revenue (365).
• There would also be the associated economic costs of a domestic adjustment cost of £900 million to £1.4 billion and an international trade adjustment cost of between £2 billion and £2.5 billion (366).

Do not trust this paper, it rests on a bed of economic chicanery and faulty assumptions. There is so much economic make-believe here that it cannot and does not do an accurate job assessing anything but the most basic elements of the British arms industry. Only takeaways are the number of people employed and relative share of the economy.