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Thread on military spending and the economy… 
Some suggestions from ministers today that 6% a year higher defence spending will not only bolster the UK’s defence capabilities but also yield much wider economic benefits...1/
Some suggestions from ministers today that 6% a year higher defence spending will not only bolster the UK’s defence capabilities but also yield much wider economic benefits...1/
...PM suggests new money would “level up our country” and “pioneer new technology”...
..And Defence Sec says it “secures UK jobs and livelihoods", "allows us to invest in our fantastic shipyards and aerospace industry, spreading prosperity to every corner of the UK”...2/
..And Defence Sec says it “secures UK jobs and livelihoods", "allows us to invest in our fantastic shipyards and aerospace industry, spreading prosperity to every corner of the UK”...2/
...Is there anything in these claims?
Could extra defence spending mean a bigger economic pie?
Are fears that this new military spending could ultimately crowd out investment in health or social care, as suggested by @PJTheEconomist, misplaced?
https://twitter.com/PJTheEconomist/status/1329402219578486786?s=20
...3/
Could extra defence spending mean a bigger economic pie?
Are fears that this new military spending could ultimately crowd out investment in health or social care, as suggested by @PJTheEconomist, misplaced?
https://twitter.com/PJTheEconomist/status/1329402219578486786?s=20
...3/
...Sadly, it seems these claims are overblown.
Economists who have looked at cross-country comparisons for a positive impact of defence spending on domestic economic growth have generally failed to find one...4/
https://core.ac.uk/download/pdf/208587547.pdf
Economists who have looked at cross-country comparisons for a positive impact of defence spending on domestic economic growth have generally failed to find one...4/
https://core.ac.uk/download/pdf/208587547.pdf
....One study in 2017 found increased military spending in a country between 1970 and 2014 was actually associated with slower economic growth, especially in more developed countries....5/
https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxzb2VtYWNyb2Vjb3xneDoyNmIzOTE1ZTYwM2MxYmMw
https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxzb2VtYWNyb2Vjb3xneDoyNmIzOTE1ZTYwM2MxYmMw
...But what about DARPA?
Didn’t the US’s Defense Advanced Research Projects Agency programme productivity-growth enhancing spinout technologies such as the internet & GPS?
...Could this explain the PM's reference to the bonus of “new technology” in his statement?....6/
Didn’t the US’s Defense Advanced Research Projects Agency programme productivity-growth enhancing spinout technologies such as the internet & GPS?
...Could this explain the PM's reference to the bonus of “new technology” in his statement?....6/
...And aren’t we getting our own ARPA thanks to Dominic Cummings?
Leave aside the question of whether an ARPA would enable us to pick $trillion bills from the economic sidewalk, the relevant point here is we can surely spend more on research without the “defence” part...7/
Leave aside the question of whether an ARPA would enable us to pick $trillion bills from the economic sidewalk, the relevant point here is we can surely spend more on research without the “defence” part...7/
... @nesta_uk argues convincingly that a UK ARPA CAN help economic growth and level up the country, but that it’s mission ought to be an objective such as tackling climate change, rather than bolstering national military defence capabilities...8/ https://media.nesta.org.uk/documents/Innovating_UK_Innovation_Policy.pdf
...There may be good reasons for spending more on defence.
But claiming that this spending will help grow the UK economy more than otherwise almost certainly isn't one...
But claiming that this spending will help grow the UK economy more than otherwise almost certainly isn't one...
