ABSTRACT
Collaboration between European defense industries has until the late 1980s functioned primarily according to a general pattern of armament cooperation, that is, on a program-by-program basis. A number of factors affect the structure and capability of Europe's defense industry. Consolidation and mergers in the electronics and telecommunications industries naturally affect the aerospace and defense industries. All international industrial consolidation assumes a political dimension that goes well beyond national security considerations. Industrial consolidation may consist of vertical or horizontal integration. At the industrial level, armament companies whose technologies are largely dependent on electronics must have access to civilian technologies. Japan's strategic decision to bolster its aerospace and defense industries will increase competition from Japanese heavy industry. This is the case particularly in the aerospace industry, where the Japanese will control costs, as they have in other areas, notably because of remarkable economics of scale. European armament industries are still controlled by the public sector to a substantial degree.
