Networks of localized weapon production, International arms trade and the diffusion of military technology

Licensed local production and direct weapons deliveries form two distinct subnetworks of the international arms trade, and this article shows that the diffusion of military technology shapes them in systematically different ways. Licensed production conveys manufacturing capability rather than finished goods, and its dynamics differ from those of arms-for-arms trade. Using SIPRI Arms Transfers data for 1956–2015 and applying Stochastic Actor-Oriented Models and Temporal Exponential Random Graph Models in five-year moving windows, I document three patterns. First, larger volumes of imported licensed production are associated with greater subsequent supplier activity, with strength varying in line with cycles in the global defence industry. Second, net reciprocity in licensed production is negative or zero, while in direct deliveries it is positive – consistent with mutual exchange reflecting shared cluster membership rather than bilateral reciprocal commitment. Third, post-Cold War network clustering rises in licensed production but falls in direct deliveries, a divergence not accounted for by changes in network size or density, or by rivalry. The patterns are consistent with a conditional account in which technology spreads, but within networked structures that reproduce rather than flatten the hierarchical organization of arms supply. The analysis is associational, and identification limits are discussed explicitly.