Economic impact of public procurement in the aerospace defence sector

This study – commissioned by Airbus – provides an assessment of the economic impact of public contracts awarded to the development, manufacturing, and maintenance of military aircraft and spacecraft in Germany.

For this purpose, DIW Econ developed a model of the German defence aerospace industry and its complex supply chain.

The model is based on the German input-output table and is adapted to capture the aerospace industry in detail and to estimate the economic effects on value added, employment and returns to public funds. Moreover, the model captures additional economic activity induced by consumption spending of workers, entrepreneurs and shareholders of involved companies.

Our model indicates substantial effects per 100 million euro net contract volume in each of the relevant segments of the defence sector of the aerospace industry on value added, employment and returns to public funds in Germany.

Total effects (direct, indirect and induced) on returns to public funds in term of taxes and social security contributions per 100 million euro net contract volume in each of the relevant segments
Segments of the defence sector of the aerospace industry	Unit	Contract volume (net)	Returns to public funds (taxes and social contributions)
Research and development	Million euro	100.0	43.4
Manufacture of air and spacecraft	Million euro	100.0	31.5
Repair and maintenance of aircraft and spacecraft	Million euro	100.0	35.8

 

The assessment of the economic impact of public contracts for the development, production and maintenance of military aircraft and spacecraft was also carried out for Spain in Spanish and English.

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