Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243490 
Year of Publication: 
2021
Series/Report no.: 
LEM Working Paper Series No. 2020/32
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
US military Research and Development (R&D) expenditures arguably represent the best example of mission-oriented policy. They are sizeable, with a clear-cut public purpose (national defense) and with the government being their exclusive beneficiary. Exploiting a longitudinal dataset linking public R&D obligations to private R&D expenditures for US states, we investigate the impact of defense R&D on privately-financed R&D. To address potential endogeneity in the allocation of funds, we use an instrumental variable identification strategy leveraging the differential exposure of US states to national shocks in federal military R&D. We document considerable "crowding-in" effects with elasticities in the 0.11-0.14 range. These positive effects extend also to the labor market, when focusing on employment in selected R&D intensive industries and especially for engineers.
Subjects: 
R&D
Innovation policy
Defense
Mission-oriented innovation
JEL: 
O30
O31
O32
O38
H56
H57
Document Type: 
Working Paper

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