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Is War Necessary for Economic Growth? Military Procurement and Technology Development

  • Ruttan, Vernon W.

New radical general purpose technologies have been the drivers of economic growth in the United States economy in recent economic history. In this paper I review the role of military and defense related research, technology development, and procurement in the development of the aircraft, nuclear power, computer, semiconductor, internet and the space communication and earth observing industries. The development of each of these industries would have been substantially delayed in the absence of support for research, technology development and procurement by the military and defense related agencies. Rates of productivity and output growth would have been substantially slower. By the early 1990's it was becoming clear that changes in the United States economy, of the defense industrial base, and in United States military and defense strategy meant that the defense and defense related industries would no longer play a prominent role in the development of new general purpose technologies. There has been a relative decline in investment in basic research and in early stage technology development in the private sector. The United States has yet to develop a coherent strategy for the public support of commercial technology development. My own sense is that when the history of United States technology development for the next half century is eventually written it will be characterized by incremental rather than revolutionary changes in both military and commercial technology. It will also be written in the context of slower productivity and output growth than the rates that prevailed in the United States during the first several post war decades or since the beginning of the information technology bubble that began in the early 1990s.

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Paper provided by University of Minnesota, Department of Applied Economics in its series Staff Papers with number 13534.

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Date of creation: 2006
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Handle: RePEc:ags:umaesp:13534
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  1. Gordon,Robert J., 2004. "Productivity Growth, Inflation, and Unemployment," Cambridge Books, Cambridge University Press, number 9780521531429.
  2. Gordon,Robert J., 2004. "Productivity Growth, Inflation, and Unemployment," Cambridge Books, Cambridge University Press, number 9780521800082.
  3. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
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