DEFENSE R&D IN THE ANTI-TERRORIST ERA

Manuel Trajtenberg

Defence and Peace Economics, 2006, vol. 17, issue 3, 177-199

Abstract: This paper analyzes the terrorist threat following 9/11, and explores its implications for defense R&D. First, it reviews the composition of defense R&D since 9/11: big weapon systems still command 30% of defense R&D spending (legacy of the Cold War), vis-a-vis just about 13% for intelligence and anti-terrorism. The second part examines the nature of the terrorist threat, and develops a simple model of terrorism, cast in a nested discrete choice framework. Two strategies are considered: fighting terrorism at its source, and protecting individual targets, which entails a negative externality. Intelligence emerges as the key aspect of the war against terrorism and, accordingly, R&D aimed at enhancing intelligence capabilities is viewed as the cornerstone of defense R&D.

Keywords: Terrorism; Defense R&D; Public goods; Intelligence; Dual-use (search for similar items in EconPapers)
Date: 2006
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Working Paper: Defense R&D in the Anti-Terrorist Era (2004)
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DOI: 10.1080/10242690600645076

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