Efficient Management of Arms Manufacturing

Author: P.A. KOKHNO

P.A. KOKHNO, Doctor of Science (Econ.)

Abstract. The paper examines the issue of efficiently managing federal budget investment in the production of new weapons depending on the effectiveness of relevant enterprises within the defense industry complex. The efficiency of arms production finds specific numerical expression in an interconnected system of indicators that characterize the degree of effectiveness in the use of major production elements.

Keywords: armaments, management, federal budget, enterprises, index system.

Soviet defense security was based on the research-and-production complex that emerged as the result of Herculean efforts to industrialize the country's economic system. The engine of the process has always been the defense industry complex (DIC) of the country. Active national policies helped concentrate within that complex the bigger share of the nation's potential in science, technology, and production, which, in turn, allowed the DIC, organized as a single system, to adequately respond to the emerging threats. And to manufacture weapons, military and specialized equipment (WMSE) that were up to or better than the world standards.1

Analysts estimated that the DIC accounted for over 70 percent of the country's science-and-technology and production potential. The DIC's achievements in science and technology were a major source of technological innovation in the civilian sector of industry as well.

Not only enterprise heads, but also regional experts give rather modest estimates of the innovation activity level of economic entities. Overall, across Russia, for example, it is described as high by a mere three percent of the pollees; every second respondent believes it is moderate, and every fifth person calls it low. The reason appears to be lack of finances at DIC enterprises, inferior management, loss of some skilled research and engineering personnel, absence of adequate conditions for small business development, and also younger managers and researchers reluctant to take part in innovative activity (see Table 1).

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Table 1

Incentives for taking part in ...

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