Brazil's Defense Industry: The Emerging Transformational ... - CAEI

analyzed the strengths, challenges, and opportunities, developing major initiatives and strategies to
facilitate economic growth in the industry. The conclusions can be extrapolated to Brazil’s case as:
1) Military contracts play a significant role in the regional development. When defining the
military cluster as the combined impact of the military installations, as well as the network of
contractors and subcontractors that support the military and work on defense contracts, the
significance of that role increases.
2) The regional base and defense contractors (complex) also have significant workforce impact
by attracting skilled employees to the region and providing specialized training opportunities
that can later be applied in industries not necessarily related to the military.
3) The cluster must provide mission support for the military, including any activity that makes it
easier for the military to achieve strategic national defense objectives and for individuals to
play their expected roles.
4) Community relations are a distinguished characteristic of the military cluster not found in
other economic clusters. Strengthening the relationship between the defense industries and
their host communities affects local policy decisions that impact location and investments
decisions.
Recognizing these characteristics of clusters, the Ministry of Defense initiative of defining a list of
“privileged” firms that are part of the National Defense Industrial Base is conceptually and empirically
bluntly wrong. It frustrates the emergence of potential defense industries.
Brazilian defense clusters may propagate across national borders, although most would be contained
within political boundaries. Since clustering algorithms depend on detailed published data, the
operational actions of the agency contribute to transparency and accountability. Relying solely on
established industries is a wrong-headed strategy. In fact, that justifies the need for an independent
and autonomous National Defense Industry Agency capable of making policies that qualify emerging
or potential industries.
PRESCRIPTIONS
The arguments offered in this paper lead to three major prescriptions. First, the wholesale
dismantlement of the defense industrial base must be terminated. Brazil should create a regulatory,
independent, Defense Industry Agency. Brazil must not allow its defense industry to degrade, and it
cannot shrink from developing a robust military power to support national security interests’ trough
deterrence, compelence or active defense. Second, the federal government should not retreat into a
neutral posture by abandoning the ability of the defense industry to induce and sustain regional
development, and the unbridled unilateralism of the Defense Ministry to shape the defense market
must be terminated. Third, the Defense Ministry must develop a Force Design Initiative, providing
C5ISR elements that integrate force structure, regulating factors and strategy in a comprehensive
force posture, with the proper balance between national defense industry supply and acquisition from
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