CURRENT TRENDS OF MILITARY OUTSOURCING DEVELOPMENT: INSTITUTIONAL AND ECONOMIC ASPECTS
Authors: Pantielieieva N. , Khutorna M. , Goncharenko O. , Kaletnik S. , Bohachov S. 
Published: December 2023

Defence outsourcing is a complex and controversial issue that arises for a variety of reasons, including a lack of military resources, the need for specialised expertise, and the desire to reduce political influence and risks. However, today the practice of military outsourcing raises many questions about security, regulation, control, ethics, accountability and transparency. This requires deeper research into the economics of military outsourcing in terms of adopting its development as a strategic goal.

The purpose of the study is to summarise the theoretical and methodological basis and deepen the conceptual foundations of the military outsourcing economy, to substantiate the determinants of the formation of an effective institutional environment for the military outsourcing market, based on the analysis of global trends and national practices. The research methodology is based on systematic, comparative and economic analysis. It has been determined that the methodological basis of the outsourcing concept is the theory of the firm and contractual relations, transaction cost economics, public choice and organisational economics, the historical evolutionary combination of which has influenced the formation of approaches to the implementation of outsourcing as a component of the management model. The high efficiency of implementation of the outsourcing concept in commercial companies has led to its penetration into the armed forces and has led to the development of military outsourcing, the purpose of which is to optimise national military budgets on the basis of maximising economic, military, social and political effects. The generalisation of theoretical and methodological foundations allowed the author to substantiate the principles and build a composite structure of the concept of military outsourcing, as well as to identify coherent groups of objects and subjects of participation.

An assessment of the current world practice of military outsourcing has made it possible to identify segmental trends in its development in the context of the urgent need to optimise national military budgets and to conclude that the pragmatic incentive is, on the one hand, the dilemma of growing military budgets and the importance of their optimisation, and, on the other hand, the urgent need to reduce costs. The author proves that military outsourcing is of great importance in the system of performing security functions of the State. A comparative analysis, identifying the advantages and disadvantages of the concepts of military outsourcing implemented by countries around the world, has revealed the dependence of their success on the quality of the institutional environment and substantiated the feasibility of applying a situation-based approach to its formation. According to this approach, the structuring of tasks assigned to the national armed forces should be implemented based on the principles of security priority and efficiency. The application of this approach makes it possible to increase the efficiency of military (combat) tasks without significantly reducing the degree of success in achieving the planned result, since the balance between the use of outsourcing and state self-sufficiency in this case is derived from adaptation to the current security situation. Proposals for building an operational framework for an effective institutional environment for military outsourcing in Ukraine are presented, outlining the main determinants, based on the analysis of global trends and national practices. It is noted that its formation should include: justification of the set of military and security functions that should be outsourced to private companies; description of the mechanisms of state control over the activities of private military companies and organisation of state response to cases of violations of human rights and/or humanitarian law.