Technological Innovation in Military R&D: Perspectives Between Mowery, Kaempffert, and Milward

Military R&D has long been one of the major driving forces of technological change, especially in the industrialized nations. R&D investment from the DoD and member countries of NATO drives both military and civilian technology advancement. The investigation is elaborated in this article in light of theoretical conceptions, mechanisms, and historical contexts that are expressing this linkage. It deals with how military-driven innovation has molded the fortunes — through case studies in some detail along with quantitative estimates — of industries related to semiconductors, commercial aviation, and information technology. This article also addresses the more general influences of military R&D on national innovation structures, due to the crowding out of private industry innovation and its effects on productivity growth.

Introduction

The influence of military establishments on technological progress is monumental, dating back to the Industrial Revolution. Military-sponsored research and development (R&D) activities, especially after World War II, have affected many civilian industries through the generation of knowledge spillovers, spinoffs, and cost reductions due to military procurement (Mowery, 2010). The case for public investment in R&D, and particularly in mission-oriented research that includes military research, has been made explicitly by a number of authors, among them Nelson (1959) and Arrow (1962). The following details debate the complex relationship between military R&D and technological innovation, focusing on the U.S. experience and making relevant comparisons with other major industrial economies such as France and the United Kingdom.

Government-Sponsored Mission R&D as The Foundation of Military Innovation

There is a need for mission-oriented R&D programs that can stimulate innovation in activities where market failures rule. Both seminal works by Nelson 1959 and Arrow 1962 emphasize that, in a world of high uncertainty and long lead times, government R&D projects should be funded where private firms would find it too risky. A good case in point is military R&D, given that inventions on defense issues are more of long-term investment and usually targeted to meet specific public welfare such as national security. In other words, military funding is imperative to ensure that long-term research projects that are usually not well-funded by the private sector (Mowery, 2010).

For example, the U.S. DoD has been spearheading mission-oriented R&D. The department’s heavy emphasis in development at the cost of basic research shows how military R&D is coordinated in a way that allows it to aim at national defense goals. By promoting interaction between industry and governments, military R&D is being established as very crucial in driving technical improvement in most fields. (Mowery, 2010).

Wartime Versus Peacetime

A frequent debate in the realm of military technological innovation relates to how effectively military-driven wartime innovation compares with peacetime innovation. Both historical and economic scholars alike cite the idea that war drives rapid technological gains due to necessity (Kaempffert, 1941), while during peacetime there is more methodical and expansive research. Wartime innovations are frequently narrowly aimed at iteration of extant technologies for deployment and thus afford little space for revolutionary technological improvements to be explored and executed. By contrast, times of peace nurture an environment in which experimental R&D may flourish to deliver radically new innovations that restructure whole industries (Milward, 1977; Mowery, 2010).

The Rise of Organized Military Innovation

Military-driven innovation became more formalized during the Industrial Revolution. For example, the naval race between Great Britain and Germany produced advanced naval technologies whose civilian spillovers were remarkably strong (Mowery, 2010). During the post-World War II era, military R&D programs in the United States were further institutionalized in the sense that activities of the DoD dominated over large-scale R&D projects relevant to both defense and civilian technologies (Lichtenberg, 1995). For centuries, the historical rise of organized military research and development is underlined as one of the basic building blocks in the development of key technologies, many of which found civilian applications.

Defense R&D Spending in OECD Economies

The pattern of defense-related R&D spending by the major OECD economies, notably the U.S., France, and the U.K., during the period 1981–2005 underlines considerable military outlays. In the United States, an unusually high share of its R&D budget is generally allocated to defense, and over half of DoD-funded R&D is carried out by industry (Mowery, 2010). For the U.S. all the time period investigated, the military R&D dominance within the wider national innovation system accords it weight in the formation of civilian technologies. In France and the U.K., there was also high industry participation in defense R&D, with university involvement being negligible compared to industrial sectors (Mowery, 2010).

Mechanisms of Influence: How Military R&D Affects Civilian Innovation

Military R&D influences civilian innovation through the following principal channels:

1. Knowledge Spillovers: Scientific and engineering knowledge generated in military research often diffuses into civilian industries, leading to technological improvements.
2. Spinoffs: Technologies developed for military applications frequently find commercial uses in civilian markets.
3. Procurement: Military procurement drives cost reductions and improves the reliability of new technologies, making them more accessible for civilian use (Mowery, 2010).

Critical Assessments of Military R&D’s Effectiveness

While military R&D has, undoubtedly, contributed much to technological development, critics maintain that such programs often emphasize performance over cost-effectiveness, as many of them result in inefficiencies outside of civilian markets (Mowery, 2010). Moreover, the concentration on high-performance technologies in military R&D might be limiting their diffusion in the cost-sensitive sectors of the civilian industry. What this begs for is much more broad-based economic effect of defense-related innovation, whether investments in such innovation make for widespread technological diffusion.

Military R&D’s Impact on Civilian Industries

Case studies with respect to military R&D in the U.S. post-war economy can give the best bet to understand the impact on civilian sectors.

• Semiconductors: Military demand for reliable and compact electronics spurred early developments in semiconductors, a technology that would later revolutionize industries such as computing and telecommunications (Mowery, 2010).
• Commercial Aircraft: The U.S. commercial aircraft industry benefited significantly from military R&D in jet engine and airframe technology. The development of these technologies, initially for military use, eventually led to commercial aviation breakthroughs (Mowery, 2010).
• Information Technology: Military R&D investments in information technology, particularly in the development of electronic computers and the Internet, have had profound and lasting effects on civilian industries. The Internet, for instance, originated from ARPANET, a military project designed to create a decentralized communication network (Mowery, 2010).

The Revolution in Military Affairs (RMA) and Technological Transformation

The concept of the Revolution in Military Affairs illustrates how revolutionary technologies, like precision-guided munitions and stealth, changed the nature of warfare. The United States, for its own part, developed the model of RMA and contributed much to the progress in military research and development in those technological breakthroughs (Murawiec, 1998). Yet, the implementation of RMA has been hampered by a number of challenges as some military sectors have been resisting such changes because of their potential ability to question conventional paradigms of war (Murawiec, 1998).

Productivity Growth and Crowding Out: Broader Economic Impacts

The overall economic impact of defense R&D has been much more hotly disputed. Some researchers hold that defense R&D does enhance private sector productivity; others argue that it crowds out private R&D by raising the costs of skilled labor and inputs in general (Mowery, 2010). Evidence, meanwhile, suggests that military R&D does not necessarily always bring increases in productivity, especially when it is targeted at high-performance technologies for which there is little or no commercialization potential (Lichtenberg, 1995).

Dynamic Optimization in Military R&D Programs

Most military R&D programs are designed to optimize dynamically, meaning that firms increase their R&D spending as a project progresses. Certainly, this is true for the longer-term defense projects where firms alter their approach to meet the changing needs of the military and governmental funding availability for the same (Rogerson 1995). This kind of approach helps keep military R&D programs flexible and abreast of technological developments while sticking to the commitment to deliver the cause of national defense.

Conclusion

In effect, military R&D has been among the most powerful technological innovation drivers of this century-in the United States, defense-related research having shaped entire industries, from information technology to commercial aviation. But military R&D is a powerful force on civilian innovation, and its economy-wide effects-such as, for example, crowding out private R&D-are very controversial. Yet, the process of military-driven innovation has yielded significant technological breakthroughs, many of which have transformed civilian industries. As governments continue to invest in military R&D, the understanding of how military technologies are transferred to civilian markets is crucial to maximizing the benefits of these investments.

References

Lichtenberg, F. R. (1995). Economics of Defense R&D. In Handbook of Defense Economics (Vol. 1, pp. 431–469). Elsevier.

Mowery, D. C. (2010). Military R&D and Innovation. In Handbook of the Economics of Innovation (Vol. 2, pp. 1219–1256). Elsevier.

Murawiec, L. (1998). Innovation, Element of Power. Geopol, C.A.S.E.

Nelson, R. R. (1959). The Simple Economics of Basic Scientific Research. Journal of Political Economy, 67(3), 297–306.

Arrow, K. J. (1962). Economic Welfare and the Allocation of Resources for Invention. In The Rate and Direction of Inventive Activity (pp. 609–626). Princeton University Press.

Kaempffert, W. (1941). Science in War. The Macmillan Company.

Milward, A. S. (1977). War, Economy, and Society, 1939–1945. University of California Press.

Rogerson, W. P. (1995). Incentive Models of the Defense Procurement Process. In Handbook of Defense Economics (Vol. 1, pp. 309–346). Elsevier.