Economists for Peace and Security

The Economics of Peace and Security Journal

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Defense innovation at any (out of control) cost? The stalemate in today's R&D and an alternative model
Renaud Bellais

Vol 4, No 1 - Symposia on Defense innovation | Conflict theory and micro-level analysis, January 2009

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 i70 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. [Keywords: defense burden, defense technology, R&D,disruptive innovation, lead-system integrator, venture capital. JEL codes: G24, H61,O32]

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