The effectiveness of ai-powered weapons from the standpoint of strategic decision-making (Case of Armenia)

The study explores the effectiveness and economic efficiency of AI-powered “smart” weapons production. It seeks to determine whether small countries facing significant security threats should allocate funds intended for arms imports toward developing an indigenous defense industry. This study employs a comprehensive analysis to evaluate key factors influencing the cost-effectiveness of AI-based weapons production. It separately examines the impact of AI-powered weapons in two scenarios: (1) importation and application and (2) domestic production. The analysis assesses their effects on national defense and security (to determine the effectiveness of defense spending) and on economic growth and development (to evaluate cost-efficiency, considering both positive and negative externalities). The analysis highlights the trade-offs between importing AI-powered weapons and investing in indigenous production. While domestic production may enhance technological independence and stimulate economic development, it also presents challenges such as high initial investment costs and technological barriers. The findings suggest that a balanced approach, considering both security needs and economic feasibility, is essential for small countries with a high probability of military conflict. The study provides policymakers with a framework for assessing the strategic and economic viability of AI-based weapons production. It offers insights into optimizing defense expenditures to enhance both national security and economic resilience.