Citation

Trajtenberg M. Def. Peace Econ. 2006; 17(3): 177-199.

Copyright

(Copyright © 2006, Informa - Taylor and Francis Group)

DOI

10.1080/10242690600645076

PMID

unavailable

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-agrave-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.