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Defense R&D In The Anti-Terrorist Era

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  • Manuel Trajtenberg

Abstract

This paper analyzes the terrorist threat following 9/11, and explores its implications for defense R&D. First, it reviews the composition of defense R&D since 9/11: big weapon systems still command 30% of defense R&D spending (legacy of the Cold War), vis-a-vis just about 13% for intelligence and anti-terrorism. The second part examines the nature of the terrorist threat, and develops a simple model of terrorism, cast in a nested discrete choice framework. Two strategies are considered: fighting terrorism at its source, and protecting individual targets, which entails a negative externality. Intelligence emerges as the key aspect of the war against terrorism and, accordingly, R&D aimed at enhancing intelligence capabilities is viewed as the cornerstone of defense R&D.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

Volume (Year): 17 (2006)
Issue (Month): 3 ()
Pages: 177-199

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Handle: RePEc:taf:defpea:v:17:y:2006:i:3:p:177-199

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Related research

Keywords: Terrorism; Defense R&D; Public goods; Intelligence; Dual-use;

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References

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  1. Ian Ayres & Steven D. Levitt, 1998. "Measuring Positive Externalities From Unobservable Victim Precaution: An Empirical Analysis Of Lojack," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 43-77, February.
  2. Cowan, R. & Foray, D., 1995. "Quandaries in the Economics of Dual Technologies and Spillovers from Military to Civilian Research and Development," UWO Department of Economics Working Papers 9509, University of Western Ontario, Department of Economics.
  3. Enders, Walter & Sandler, Todd, 1995. "Terrorism: Theory and applications," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 9, pages 213-249 Elsevier.
  4. Lichtenberg, Frank R., 1995. "Economics of defense R&D," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 15, pages 431-457 Elsevier.
  5. Molas-Gallart, Jordi, 1997. "Which way to go? Defence technology and the diversity of 'dual-use' technology transfer," Research Policy, Elsevier, vol. 26(3), pages 367-385, October.
  6. Manuel Trajtenberg, 2004. "Crafting Defense R&D Policy in the Anti-Terrorist Era," NBER Chapters, in: Innovation Policy and the Economy, Volume 4, pages 1-34 National Bureau of Economic Research, Inc.
  7. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  8. Kobi Kagan & Asher Tishler & Avi Weiss, 2005. "On The Use Of Terror Weapons Versus Modern Weapon Systems In An Arms Race Between Developed And Less Developed Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(5), pages 331-346.
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Cited by:
  1. Berman, Eli & Laitin, David D., 2008. "Religion, terrorism and public goods: Testing the club model," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1942-1967, October.

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