Learning to restructure: Studies of transformation in the Russian defense sector

Release date: 1996-05

Perceptions of the Russian military–industrial complex, as they emerge from policy debates and academic literature, center around three major points. First, it is immense—the share of defense industry employment in overall industrial employment is about 25 percent. Second, the military–industrial complex used to be organizationally and technologically separate from the rest of the economy; this is the ‘dual economy’ hypothesis. Third, the managerial culture of enterprise directors was (and, by implication, still is) extremely conservative. Whereas the first proposition is certainly true, the remaining ones are debatable. Unfortunately, the creation of a substantially reduced defense sector separated from the civilian economy with well-trained (but conservative) managers is one of the objectives of Russian defense industry restructuring, rather than the current state of affairs. The heterogeneity of military-related enterprises is only one side of the problem. The other side is that almost any strictly civilian enterprise was affected (although to a widely varying degree) by the constraints on product design and plant lay-out imposed by the requirements of the military. Civilian technologies were supposed to be designed in a way that guaranteed easy conversion to military manufacturing.