Enrico Moretti, Claudia Steinwender, John Van Reenen, 18 December 2019

Defence R&D is a major component of government-sponsored R&D in many developed economies, and the effect of defence R&D expenditures on private sector innovation and economic growth has been a hotly debated topic for many years. This column presents a systematic analysis across all OECD countries which suggests that a 10% increase in defence R&D results in a 4% increase in private R&D. It also reveals evidence of spillovers between countries, with increases in government-funded R&D in one country appearing to increase private R&D spending in the same industry in other countries.


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