The Economic Consequences of Investing in Shipbuilding: Case Studies in the United States and Sweden
RAND NATIONAL DEFENSE RESEARCH INST SANTA MONICA CA
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The Economic Consequences of Investing in Shipbuilding Case Studies in the United States and Sweden assesses the economic consequences of shipbuilding that is, the economic impacts that a shipbuilder has on its local community and region. This report is part of a larger project to inform Australian policymakers of the economics and feasibility of various strategies for the Australian shipbuilding industrial bases that produce or repair naval surface vessels. The authors utilize a case study methodology to examine Newport News Shipbuilding in Newport News, Virginia, and Austal USA shipbuilding in Mobile, Alabama. They complement and contrast analysis of these shipbuilders by examining the impact of the Saab Aeronautics Gripen program on Linkoping, Sweden. Both shipbuilders have had favorable effects on their local economies. Neither shipbuilder shows evidence of sizable adverse displacement effects the shipbuilders appear not to have deprived other local firms of labor. On the other hand, neither shipbuilder has given rise to the Silicon Valley type ecosystem of favorable spillovers and spin-offs that appears to have emanated from the Gripen program. The research therefore stakes out a middle-ground position in the Australian policy debate. The authors accept neither a shipbuilding has no impact argument nor a shipbuilding will have large-scale beneficial effects argument. The indigenous production of ships in Australia cannot be expected to have both low opportunity costs and displacements and high levels of favorable spillovers. Instead, these two objectives seem to trade off against one another.
- Economics and Cost Analysis
- Marine Engineering