In September 2007, 17 Iraqi civilians were shot and killed by employees of the United States-based company Blackwater. The killings drew public attention to the growing use by governments of private companies in war zones, although their use has caused concern among some non-governmental organizations (NGOs), researchers and politicians for many years. Much has been written about the ethical, legal, security and governance issues raised by this practice. While this paper addresses these wider issues it does not seek to add to that literature but rather to address the less well-covered economic, industrial and commercial aspects of the wider military services industry. Two trends led to the creation of the military services industry. The first was the large supply of discharged military personnel after the end of the cold war and the widespread demand for these personnel from both weak states facing internal conflicts and non-state actors operating in conflict zones. The second trend was the increased privatization and outsourcing by the governments in advanced market economies of a wide range of functions that were previously carried out by military forces or defence ministries. The military services industry that has been created by these two overlapping trends can be viewed as part of the broader arms industry, which traditionally has been conceived of as providing military goods rather than ser­vices. However, some types of military service, such as equipment maintenance, were already an integral part of the arms industry even before the recent trend of military outsourcing. Most major military goods-producing companies have provided such services, but the above trends have generated. a strong expansion in the military services industry. This has involved both the growth of new specialist military services companies and the increasing diversification of established arms-producing companies into military services.

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