From mboxrd@z Thu Jan 1 00:00:00 1970 X-Spam-Checker-Version: SpamAssassin 3.4.5-pre1 (2020-06-20) on ip-172-31-74-118.ec2.internal X-Spam-Level: X-Spam-Status: No, score=0.8 required=3.0 tests=BAYES_50,LOTS_OF_MONEY autolearn=ham autolearn_force=no version=3.4.5-pre1 Date: 16 Aug 93 13:37:21 GMT From: world!srctran@uunet.uu.net (Gregory Aharonian) Subject: How microeconomically insignificant is Defense R&D? Message-ID: List-Id: For some time I have been arguing that many DoD software initiatives are a waste of money and should be no longer funded, for the following reasons - they seem to have little impact outside the DoD (STARS), they waste money on extravagant services (ASSET), or they duplicate services the private sector can more cheaply offer (SEI). But for all of my arguments, especially in light of the DoD's attempts to start dual-using everything, the real question is: How microeconomically significant is DoD software research? What exactly is this country getting for the hundreds of millions of dollars being spent each year? And more generally, how microeconomically significant is DoD research? To shed some light on this, and to give ammunition to those of us who believe that DoD, and the rest of the government, should not be in the venture capital business, (i.e. stop using my tax dollars to compete with me - that's what we fought the Cold War for) consider the abstract to the following article: DEFENSE R&D, TECHNOLOGY AND ECONOMIC PERFORMANCE A LONGITUDINAL ANALYSIS OF THE US EXPERIENCE by Alok Chakrabarti, C. Lenard Anyanwu New Jersey Institute of Technology IEEE TRANS ENGINEER MANAGEMENT 40, 2, 136-145, May 1993 This paper examines the issue of impact of defense expenditure from different perspective, i.e., in terms of the direct relationships between defense R&D and economic performance as well as the indirect relationships via the development of (1) technical and scientific skills and (2) new technology. The model was estimated for the period 1955-1988 on a time-series set measured as elasticities. This effect of defense R&D is observed particularly through technological change as measured by the number of patents granted to US organizations and individuals. There is no statistically significant evidence of resource diversion or "crowding effect" on the civilian economy due to defense R&D. SIMILARLY, THERE DOES NOT SEEM TO BE ANY STATISTICALLY VISIBLE EVIDENCE OF DIRECT EFFECT FROM DEFENSE R&D TO THE ECONOMY. Interestingly the non-R&D aspect of defense spending appears to have no statistically significant effect on the major components of civilian economic performance, technical-skills formation or technological change. From a policy point of view, this suggests that technical spillovers may be limited to a specific kind of defense spending and not to defense spending in general. Another interesting implication is the rivalry between R&D and non-R&D defense spending is in favor of the latter. =========================================================================== Thus one of the few independent studies of defense R&D spending, unlike those SDI (and others in the DoD) commission to brag about million dollar spinoffs from billion dollar investments (can you spell ROI?), we see evidence that maybe the country is getting little in non-defense return from the billions of taxdollars being spent each year. For software R&D, well VHDL, SGML, CALS, TCP/IP came out of the DoD and have had much benefit on their communities. Ada, probably the most spinoffable, is dead outside the DoD, while much DoD software engineering methodology (other than maybe SEI's CMM) that has been developed over the last fifteen years rarely was adopted by the software industry. DoD software reuse efforts are economically unsound and function only as long as the DoD provides welfare money - none know how to transition to private operation, so not much spinning off there. Most government software that has been commercialized has come out of NASA and DOE. And the music world has not benefitted much from DoD's subsidy of the Ada Follies. And ARPA, well since ARPA doesn't have a directory of all of the software it has funded, it certainly can't determine how much impact their software has had. So an honest study of DoD software R&D's impact on the general economy would probably reflect the conclusions of the above paper. In the case of defense R&D for software, given that such software rarely if ever: appears or transitions to the private sector, is patented, is used, or is commercialized, it becomes interesting to start speculating on whether the DoD should stop funding its software R&D activities, and rely more on the private sector, which for the most part is years ahead of DoD efforts anyways, and without the spending of taxpayers dollars needed. Anyways I highly recommend people get a copy of the article. -- ************************************************************************** Greg Aharonian srctran@world.std.com Source Translation & Optimization 617-489-3727 P.O. Box 404, Belmont, MA 02178