Citation

Buck D, Hartley K, Hooper N. Defence economics 1993; 4(2): 161-178.

Copyright

(Copyright © 1993, Informa - Taylor and Francis Group)

DOI

10.1080/10430719308404757

PMID

unavailable

Abstract

Defence R&D is a controversial subject. Critics argue that it “crowds-out” valuable civil R&D expenditure and drains the civil economy of qualified scientists and engineers (QSEs). This paper assesses the evidence for crowding-out in the UK. Cointegration techniques are used to test whether there is a negative causal relationship between public defence and civil R&D expenditure. Because the manpower debate has been hampered by the lack of official statistics we develop estimates of numbers of QSEs employed on defence R&D in UK industry over the period 1975-92. Turning to the “Peace Dividend”, our results suggest that a 10% cut in UK defence equipment expenditure will reduce employment levels by 6%. We conclude that in the absence of a negative causal relationship between public defence and civil R&D expenditure there may be a role for public policy in aiding the absorption of displaced defence QSEs into the economy.