The impact of procurement-driven technological change on U.S. manufacturing productivity growth

David S. Saal

Research output: Contribution to journalArticle

Abstract

As we enter the 21st Century, technologies originally developed for defense purposes such as computers and satellite communications appear to have become a driving force behind economic growth in the United States. Paradoxically, almost all previous econometric models suggest that the largely defense-oriented federal industrial R&D funding that helped create these technologies had no discernible effect on U.S. industrial productivity growth. This paper addresses this paradox by stressing that defense procurement as well as federal R&D expenditures were targeted to a few narrowly defined manufacturing sub-sectors that produced high tech weaponry. Analysis employing data from the NBER Manufacturing Productivity Database and the BEA' s Input Output tables then demonstrates that defense procurement policies did have significant effects on the productivity performance of disaggregated manufacturing industries because of a process of procurement-driven technological change.
Original languageEnglish
Pages (from-to)537-568
Number of pages32
JournalDefence and Peace Economics
Volume12
Issue number6
DOIs
Publication statusPublished - 2001

Keywords

  • productivity
  • R&D
  • procurement
  • manufacturing
  • United States
  • technological change

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