Unmanned Ground Vehicles: Macroeconomic Trends

GlobalData Thematic Research 27 August 2020 (Last Updated August 27th, 2020 14:47)

Among the unmanned systems, unmanned aerial vehicles (UAVs) are the ones that have seen the quickest development in the last two decades.

Unmanned Ground Vehicles: Macroeconomic Trends

Although examples of both the UAVs and unmanned ground vehicles (UGVs) were first used in the 1930’s, the former have seen a remarkable increase in use during the last two decades.

Listed below are the key macroeconomic trends impacting the UGV theme, as identified by GlobalData.

Defence budgets

A manufacturer should bear in mind that defence spending increases can be either due to political risks, thus being inelastic, versus a potentially declining state budget, or due to an increase in the GDP, therefore fluctuating.

Defence budgets will determine the ability of governments to acquire the necessary capabilities and establish cooperation with allied nations. Nevertheless, considering the range of security threats that need to be tackled, along with the rest of a society’s needs, financial and other resources (manpower, raw material etc.) will always be in scarcity. UGV systems are ideal as they provide diverse capabilities, with low associated costs and most importantly they remove soldiers from harm’s way.

Common procurement and R&D cost-sharing

Sharing the costs of platforms and systems development is expected to expand as a trend, as new technologies require considerable investments. In addition, given the limited funding in relation to the range of needs, initiating common procurement between countries, or R&D between either countries or companies, can reduce the acquisition and life-cycle costs.

Countries need to invest in R&D to improve or develop the necessary technologies that will allow unmanned and robotic systems to perform effectively. Until now, the US has been the biggest R&D spender (around $18.1bn in 2019) in defence, investing in disruptive technologies and systems. European NATO countries and China fall behind in absolute terms.

Political risk

Political uncertainty is one of the main factors driving defence spending. The biggest political risks currently include Chinese policy in the Asia-Pacific region, Russian aggression in Eastern Europe and the invasion in Crimea, low-intensity conflicts, global terrorism and organised crime.

Economic risk

Trade war policies have a significant impact on global and national economies. Being used as a political weapon between countries, they feed a downward spiral of measures and countermeasures between opponents. This could potentially result in an escalation due to misperception.

This is an edited extract from the Unmanned Ground Vehicles (Defence) – Thematic Research report produced by GlobalData Thematic Research.