Today, Europe is faced with a prolonged stage of economic stagnation. Why are this way, and to what degree? The reply was a bit of a proposal of the way out that through higher defence expenditure the area could be converted into effective economic stimulus, actually shooting us out of the No. 1 worldwide investment market repercussions at the periphery. While the precise nature of the relationship between military spending and total economic growth is debated, it is widely accepted that military spending stimulates job creation. Historical evidence shows that defence-related expenditure creates a comparatively high number of well-paid jobs. Indeed, some defence contractors are already competing to poach talent from Germany’s battered car industry. But the success of this approach hinges on one thing: where the purchased defence equipment comes from.
One of the biggest obstacles to capitalizing on this potential economic windfall is Europe’s reliance on foreign arms. Half of the acquisitions on the continent were from non-European origin. This would mean that much of any defence budget beyond what we currently spend would go into foreign hands, thus reducing the drag on the possibility of stimulating the national economy. The alleged economic multiplier, which is based on the belief that capitalism of itself generates wealth through capital circulation, would be greatly diminished. In order to maximize gains, the spending has to go to European companies, which means more production and jobs at home. What is needed, in short, is a “buy European” policy.
The Case for Coordinated Industrial Policy
The role of an integrated industrial policy can make sure the European defence contractors be global players. It does need a degree of political harmonisation among Europeans — not least as to the agents that wind up arms production. Lacking such coordination, however, the chances of achieving the economies of scale and technological innovation that are the bedrock of international competitiveness is going to be severely compromised. Curtailment of national approaches may lead to continuing fragmentation and locking-in of inefficiencies while preventing the building of a strong, self-sustaining European defence industrial base.
R&D: Strategic Investments
This leap of faith in defence expenditure becomes a shoal, a sustainable economic growth driver through the R&D component of the nascent technologies mentioned above. However, I will rely on historical evidence demonstrating a bias for government support covering R&D within the bounds of military uses. This at least partially explains the tech dominance of countries such as China and the US, who have long made heavy investments in defence-related R&D. Europe, on the other hand, has been comparatively lagging behind here. Addressing this gap would take a sustained effort and investment in R&D of advanced tech for defence and civilian use-cases. Not only would this reinforce European defence, but also would generate worthwhile technological spillovers to the benefit for all.
The Dual Nature: Security Consultative vs Economic.
So, the point to take away from this is that it is security over economic growth which is driving this boom in European defence spending. While infrastructure and construction projects (roads and schools, most notably) are viewed in many cases as far more proximate and effective vehicles to stimulate economic activity, the present geopolitical context demands that deterrence in Europe be strengthened. However, that does not rule out the possibility of benefiting from the economic upside of increased spend on defence. A more thoughtful package of policies that emphasizes domestic procurement, industrial coordination, and strategic investment in R&D could enable European policymakers to balance security goals and economic growth.
Adopt a Dual-Use Strategy for Fast Sustainable Growth
Hence enhanced defence outlay should have a dual-use approach that preps sustainable growth of economy. That means defence technologies and research should be transfer- and dual-use to civilian industry. Supporting such efforts means that money spent on defence doesn’t just end up with defence, but instead of simply creating a military capacity, results in new industries and employment. Technologies developed for defence purposes, such as materials science, artificial intelligence, and cyber security, are also applicable to an even larger market, in areas such as health, manufacturing and finance. This second-order function — intercepting incoming as well as outgoing projectiles, including those with kinetic and non-kinetic functions — maximises return on investment and entrenches defence expenditure as an agent of long-term economic growth. Above all, when security’s claim on defence spending is dominant, the economic interests cannot be denied either. Through carefully thought-out, coordinated action, European policymakers can turn defence spending into a driver of economic renewal, and thus store up a stronger defence for the continent — and prosperity goes hand in hand with security.
