Defence and space expenditures in the US: An inter‐firm analysis1

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Abstract
The economic impact of defence and space expenditures has been an important policy issue because of the secondary benefits expected to be accruing from it. In order to capture the scientific and technological value added of defence and space financed productions, we took as indicators patents and scientific and technical publications. The economic performance was measured by firm growth (in terms of rates of change in the number of employees), and by rates of return on sales. Firm level analysis showed that military R&D contracts did not contribute to economic or technical performance. NASA contracts were also not associated with economic performance and with technical progress as measured by patents, but they helped to raise the number of scientific publications. On the other hand, the standard variables (capital formation and own R&D activities) proved to be mostly relevant.