Download eBook for Free

FormatFile SizeNotes
PDF file 4.3 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback86 pages $19.00 $15.20 20% Web Discount

Research Questions

  1. What would individuals who would be employed in shipbuilding in Australia be doing if that work were not in Australia?
  2. To what extent would shipbuilding in Australia generate favorable spin-offs and spillovers?
The Economic Consequences of Investing in Shipbuilding: Case Studies in the United States and Sweden assesses the economic consequences of shipbuilding — that is, the economic impacts that a shipbuilder has on its local community and region. This report is part of a larger project to inform Australian policymakers of the economics and feasibility of various strategies for the Australian shipbuilding industrial bases that produce or repair naval surface vessels. The authors utilize a case study methodology to examine Newport News Shipbuilding in Newport News, Virginia, and Austal USA shipbuilding in Mobile, Alabama. They complement and contrast analysis of these shipbuilders by examining the impact of the Saab Aeronautics Gripen program on Linkoping, Sweden. Both shipbuilders have had favorable effects on their local economies. Neither shipbuilder shows evidence of sizable adverse displacement effects; the shipbuilders appear not to have deprived other local firms of labor. On the other hand, neither shipbuilder has given rise to the Silicon Valley–type ecosystem of favorable spillovers and spin-offs that appears to have emanated from the Gripen program. The research therefore stakes out a middle-ground position in the Australian policy debate. The authors accept neither a "shipbuilding has no impact" argument nor a "shipbuilding will have large-scale beneficial effects" argument. The indigenous production of ships in Australia cannot be expected to have both low opportunity costs and displacements and high levels of favorable spillovers. Instead, these two objectives seem to trade off against one another.

Key Findings

There Are Slack Economies in the Regions Surrounding Newport News Shipbuilding and Austal USA

  • There is considerable rigidity in workers' abilities to find commensurate employment.
  • Workers employed in shipbuilding appear to be quite geographically immobile (though willing to incur sizable driving commutes).
  • The two shipbuilders are able to attract many job applicants, suggesting that these workers do not have alternative employment options as desirable as working at the shipbuilders.
  • The shipbuilders have not displaced high-value activities for many of their workers.

The U.S. Shipbuilders Did Not Generate Many Favorable Spin-Offs and Spillovers, but the Gripen Program Did

  • Newport News Shipbuilding has generated relatively few spillovers, and the region has been critiqued for a dearth of entrepreneurial activity.
  • No cluster of suppliers has yet emerged around Austal USA.
  • The Gripen analogy appears to be overly optimistic as to the magnitude and nature of spin-offs and spillovers that might be expected from naval shipbuilding in Australia.
  • The indigenous production of ships in Australia cannot be expected to have both low opportunity costs and displacements and high levels of favorable spillovers. Instead, these two objectives seem to trade off against one another.

Table of Contents

  • Chapter One


  • Chapter Two

    Economic Multipliers and Their Implications

  • Chapter Three

    Newport News Shipbuilding Case Study

  • Chapter Four

    Austal USA Shipbuilding Case Study

  • Chapter Five

    The Gripen Case Study

  • Chapter Six


This research was conducted within the Acquisition and Technology Policy Center of the RAND National Security Research Division (NSRD).

This report is part of the RAND Corporation Research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.