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Defense innovation at any (out of control) cost? The stalemate of today’s R&D policy, and an alternative model

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  • Renaud Bellais

    (European Defense and Security at Astrium, Paris and Department of Economics, École Spéciale Militaire St Cyr Coëtquidan)

Abstract

Technological superiority is a key element to achieve defense effectiveness, and R&D spending is crucial to access leading-edge technologies. Nevertheless, the current defense R&D model seems to reach its limits, leading to an out-of-control burden: In spite of spending almost USD70 billion yearly, defense R&D in NATO countries does not produce the expected results. This low effectiveness leads to criticism about today’s model of defense R&D, especially the channeling of credits by large incumbents through the Lead System Integrator model. Spurring disruptive technologies and path-breaking innovation requires an alternative approach. It is then interesting to analyze the possible use of venture-capital mechanisms to complement the mainstream approach to defense R&D. Even though the article does not develop a full analysis of the relationship between defense R&D and the principles of venture capital, it identifies criteria for such an alternative approach.

Suggested Citation

  • Renaud Bellais, 2009. "Defense innovation at any (out of control) cost? The stalemate of today’s R&D policy, and an alternative model," Economics of Peace and Security Journal, EPS Publishing, vol. 4(1), pages 6-13, January.
    • Handle: RePEc:epc:journl:v:4:y:2009:i:1:p:6-13
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    More about this item

    Keywords

    Defense burden; defense technology; R&D; disruptive innovation; lead-system integrator; venture capital;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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