Handbook of intelligence studies / edited by

MINH A. LUONG
Types of industries targeted
While nearly every industry is at risk, economic espionage collectors have concentrated their
efforts on a number of specific industries. In the commercial sector, these include agriculture,
biotechnology, chemical, computer technology, fiber optics, medical devices, pharmaceuticals,
robotics, and telecommunications. 13 Commercial sector industries all play a role in fostering
economic growth. For example, in countries where domestic food production has leveled off
or has dropped, purchasing agricultural technology and materials has proven to be a costly
endeavor. Through industrial espionage, acquiring countries can obtain agricultural technology
and the formulations to produce fertilizers and pesticides at a much lower cost, provided that
they have the necessary domestic manufacturing capability and access to required raw materials.
An important point to note here is that while copy-cat equipment and chemicals derived from
economic espionage may not perform as well as products manufactured from its original
makers, that issue is not the primary concern. The key factor is whether the copy-cat products
are better than no products at all or are better than antiquated products currently in use. Given
the low cost, high payoff of acquiring technology and products through economic espionage,
the improvements are worth the expense.
With respect to military technologies, many countries use economic espionage to improve
the capabilities of their military forces as well as to improve the competitiveness of their arms
industries. Targeted military industries include aeronautics, armaments, energetic materials,
chemical and biological systems, guidance and navigation systems, information systems, manufacturing
and fabrication, marine systems, sensors and lasers, and space system technologies. 14
Countries that engage in economic espionage to collect military and dual-use technologies are
frequently trading partners but are restricted from receiving military-grade technologies due to
national security export restrictions. Countries with the most advanced military technology
and greatest number of export restrictions include the NATO countries of Western Europe and
the United States. The investments required to maintain military advantage of potential enemies
are significant, running into the billions of dollars in research, development, and deployment
costs. Compromised technology losses through economic espionage put these investments at
significant risk. One example from the 1980s comes from a subsidiary of Toshiba Corporation,
Toshiba Machine, which, in a violation of American and Japanese technology transfer restrictions
designed and installed sophisticated milling machines in Soviet shipyards which enabled
the Soviet submarines to run as quietly as any British or American nuclear submarine. This
unauthorized transaction earned Toshiba Machine US$17 million but cost the American
military US$30 billion to regain that lost advantage in submarine operation and detection. 15
Collection methods
For collectors of economic intelligence, there is a significant difference in operating between
open and closed economic systems. 16 In open economic systems, obtaining economic intelligence
is relatively easy and utilizes tools not unfamiliar to a stock investor. Government
economic reports and company quarterly and annual disclosures make up the foundation of
any country analysis. This information can be supplemented and cross-verified by private data
and analysis from research firms and investment companies. On-site visits of companies and
manufacturing plants are possible if arranged in advance. Even open source analysis of media
reports and academic and trade journals provide rich streams of economic data. In closed
economic systems, the economic intelligence collection task becomes more challenging.
Harassment from law enforcement officials and state security officers hampers collection
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