Secondly and ultimately more importantly competition inevitably suffers and

Secondly and ultimately more importantly competition

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inevitably suffers, and without the need to compete, there is little incentive to take a risk and innovate. As Eisenhower put it in the same 1961 farewell speech that first introduced the term ‘military-industrial complex’ to the common lexicon, “a government contract becomes virtually a substitute for intellectual curiosity.” The economic paradox of the innovation deficit Economic factors play a major role too. While the US has the world’s largest defence expenditure in dollar terms, paradoxically many point to a lack of DOD spending as one of the key reasons for the nation’s growing innovation deficit. An important budgetary trend lies hidden in the high absolute numbers. Since 2009, the US defence spend has fallen from 4.6% of GDP to just 3.3% today, and although the latest figures from the Stockholm International Peace Research Institute show that this decline has now been reversed, the fact remains that GDP expenditure on R&D is less than half what it was thirty years ago.“Since 2009, the US defence spend has fallen from 4.6% of GDP to just 3.3% today.” For small-to-medium companies in the mid- and lower-tiers of the sector, that generates something of a crisis of commercial confidence when it comes to investing heavily in developing precisely the kinds of technologies that the Pentagon needs for the future. The same is certainly not true in China, where innovation in the industry is booming, creating the ideal conditions to incubate a talent pool for the future that is as competitive as it is inventive. It is hard to imagine that the two things are not related. However, it would be far too simplistic to suggest that it is simply all about government investment. If technology is to remain at the heart of the oft-quoted US ‘overmatch’, the DOD also needs to address changing marketplace realities and accept that with the huge expansion of global tech firms, defence contracts are now significantly less influential than they once were. Putting it bluntly, the Pentagon no longer has the deepest pockets in town. In the 2015 study ‘National Security Technology Accelerator: A Plan for Civil-Military Industry Innovation’ from New York University, the authors observed that “the emergence of international commercial and consumer high-tech markets over the past two decades has substantially displaced DOD as the centre of gravity for global R&D activity.” It is for these markets that many of the cutting-edge technologies that the US military may one day come to depend on are being developed, not the traditional defence contract route. Reshaping relationships: Forging new commercial partnerships That does not automatically make for a tale of doom and gloom. The DOD has a long history of working successfully with the private sector, and some of today’s most profoundly important technologies, including the internet and GPS navigation, arose directly as a result, while many others have been significantly boosted by defence funded projects. Nevertheless, as
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  • Spring '14
  • Feldman,J
  • The American, United States Department of Defense, United States armed forces, Military budget of the United States, Military budget, STEM Fields, Swords to ploughshares

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