4/21 Lunch: Nayantara Hensel, Chief Economist, Department of the Navy

The Impact of Recent Macroeconomic Forces on the Global Defense Industrial Base

The defense industrial base in the US has witnessed many changes over the past twenty years, following the end of the Cold War and has been reshaped by a variety of significant forces. This presentation examines the impact of the recent shift in defense priorities toward irregular warfare on the defense industrial base, the globalization of the defense sector, and, especially, the impact of the financial crisis in Europe on the orientation of the US and European industrial bases. The presentation also explores the increasing reliance of the defense sector on rare earth minerals from China, and discusses recent developments in the rare earth sector, as well as current challenges.

Dr. Nayantara Hensel is the Chief Economist for the Department of the Navy and provides economic guidance on defense industrial base issues, growth projections, the federal budget, interest rates, unemployment, exchange rates, inflation, the financial health of defense contractors, as well as trends in the broader economy and in the defense sector. Dr. Hensel received her BA, MA, and Ph.D. from Harvard University, where she graduated magna cum laude and Phi Beta Kappa and specialized in finance and economics. She has taught at Harvard University, the Stern School of Business at New York University (NYU), and the US Naval Postgraduate School’s Graduate School of Business and Public Policy, in addition to serving as the Pentagon Scholar in Residence. In the private sector, Dr. Hensel previously served as Senior Manager and Chief Economist for Ernst & Young’s litigation advisory group, managing economist for the New York City office of the Law and Economics Consulting Group (LECG), an economist in the economic consulting arm of Marsh & McLennan. Dr. Hensel has written over 30 articles and research reports. Her recent research has focused on globalization and the US defense industrial base, the role of defense mergers in improving weapons systems cost efficiency, efficiency in IPO auctions relative to traditional processes, the factors impacting discount rates for US Marine Corps personnel, and market structure-specific and firm-specific factors impacting economies of scale and density in European and Japanese banks. She has published in the International Journal of Managerial Finance, the Review of Financial Economics, Business Economics, the European Financial Management Journal, the Journal of Financial Transformation, and Harvard Business School Working Knowledge. Dr. Hensel has presented her work at a variety of institutions, including the Federal Reserve Banks in Chicago, Dallas, Boston, and Cleveland, the Federal Reserve Board of Governors, Department of Justice, the US Treasury, and RAND, as well as universities, such as London Business School, and Harvard University. Dr. Hensel is also a frequent presenter at conferences, including the USAF Air and Space Technology Exposition, the NBER National Security Working Group, the National Association for Business Economists (NABE) annual conference, the Western Economics Association, the Midwestern Economics Association, and the European Financial Management Association.