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The impact of procurement-driven technological change on U.S. manufacturing productivity growth

  • David Saal

As we enter the 21st Century, technologies originally developed for defense purposes such as computers and satellite communications appear to have become a driving force behind economic growth in the United States. Paradoxically, almost all previous econometric models suggest that the largely defense-oriented federal industrial R&D funding that helped create these technologies had no discernible effect on U.S. industrial productivity growth. This paper addresses this paradox by stressing that defense procurement as well as federal R&D expenditures were targeted to a few narrowly defined manufacturing sub-sectors that produced high tech weaponry. Analysis employing data from the NBER Manufacturing Productivity Database and the BEA' s Input Output tables then demonstrates that defense procurement policies did have significant effects on the productivity performance of disaggregated manufacturing industries because of a process of procurement-driven technological change.

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

Volume (Year): 12 (2001)
Issue (Month): 6 ()
Pages: 537-568

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Handle: RePEc:taf:defpea:v:12:y:2001:i:6:p:537-568
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