A Theoretical Analysis of the Effect of Economy of Scale on Security-Based Export Control Policies

The Export of high-tech goods is beneficial to export countries' economic interests. However, these goods may often be characterized as dual-use due to their military and civilian applications or may simply be categorized as advanced military items. If these imported goods are employed in a manner that damages the exporting country's national security, it may institute its national security-based export control policies. What's the role of economic factor in government's export control policies? High-tech goods have characteristics of economy of scale. If the market demand is smaller in scale than the cost of breaking-even for the company, the country will loosen its export control policies or implement its relaxed export control policies. In this manner, the exporting country's high-tech industries will be able to meet the demand of economy of scale and will be able to break even or even make profit, thus ensuring survival. If, on the other hand, the market demand is larger than the scale necessary to break even, the country will tighten its export control policies.