SECRET UK EYES A
which it can afford to ignore. The pattern of outward direct investment is likely to remain similarly diversified, with a concentration on the United States, the Pacific region and
Western Europe.
17. Defence Exports. The world market for defence exports is unlikely to change significantly in real value terms from today's levels, but the element accounted for by 00A nations is expected to increase to about 80% of the total. If present policies are maintained the UK is expected to maintain its share of the OOA market, even allowing for an increasing number of sophisticated third-world suppliers, as collaborative links on an industry-to-industry basis expand, particularly between the UK, the Middle East and Asia. The UK currently enjoys a strong position as a platform supplier, and as the most important supplier of electronic and equipment systems, which will be the area of the highest potential growth rate over the period. Details are at Appendix 4. Such exports will remain an area of activity where military and commercial interests can be both complementary and conflicting. They are beneficial in that they help to sustain a national manufacturing base, the profits from them can be balanced to some degree against the costs of the UK's own defence equipment programme, and they may enable the British
Armed Forces to take advantage of economies of scale. return, the Armed Forces may assist sales both directly, through attaches and support teams, and indirectly by enhancing the image of British products. On the other hand, intense international competition can put pressure on developing nations to buy equipment they neither need nor can afford, thus jeopardizing stability, while proliferation of advanced systems complicates the operational problem OOA, reduces the ability of the developed nations to act as arbiters in the Third World and will render some of them
increasingly vulnerable to direct attack from it.
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