From wealth to power? : the failure of layered reforms in India's defense sector

Abstract

This article puts forward a historical institutionalist explanation of how rising powers translate increased wealth into military strength. It develops microfoundations for path dependence and applies them empirically as an approach to defense procurement. The Indian government layered market reforms onto a state-run defense sector. It aimed to exploit competition in its massive acquisition of combat fighter aircraft after 2007. Yet, despite formal rule changes and overwhelming material benefits, government reformers ultimately failed and returned to an intergovernmental purchase in 2015. I develop two mechanisms to explain this instance of failed institutional change in India. First, the reform's structural misfit created uncertainty, as some of the prerequisites for a market such as sound legal protection and private actors were absent. Second, the government reformers were reluctantly supported at the outset by a coalition of so-called opportunists, which neither fully embraced nor strongly opposed institutional reforms. When problems resulting from the misfit multiplied and promised benefits vanished, however, this coalition dissolved and layering failed. A process-tracing analysis and the triangulation of a diverse set of data substantiate this explanation. The article contributes to debates on institutional change as well as to those on rising powers and the constraints they face in their attempts to transform growing wealth into military strength. Most significantly, it specifies a causal pathway along which state institutions shape the defense policies of rising powers. Layered reforms may fail not only when faced by defenders of the status quo; opportunists may suffice to defeat them.