THE ROLE OF DEFENCE INNOVATION IN NATIONAL SYSTEMS OF INNOVATION : SOME FINDINGS BASED ON THE FRENCH...

THE ROLE OF DEFENCE INNOVATION IN NATIONAL SYSTEMS OF INNOVATION :

SOME FINDINGS BASED ON THE FRENCH CASE

Second International Workshop of the BRICS Project, 25-27 April 2007, Rio de Janeiro, Brazil

Claude Serfati, C3ED, University of Saint-Quentin-en-Yvelines

[email protected]

Bureau.scf

Claude Serfati, The Role Of Defence Innovation......

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Outline : Main findings on the French case Understanding of the political

economy of globalisation Some hypothesis in a comparative

perspective


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A welcome idea : addressing defence innovation in relation to national system of innovation

Importance of defence, nuclear and aerospace programs in BRICS countries. Indeed,

“Military R&D will probably continue to account for most government industrial R&D spending in the United States, France, Britain, and Israël” as well as “interestingly, every one of the low-income countries [Korea, Taïwan, Brazil, Argentina, Israël, C.S.] in our study has been influenced by national security concerns” [Nelson Editor, 1993, p.508]…

…Still, an understudied field of research


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A welcome idea : addressing defence innovation in relation to national system of innovation :

Opens the ‘black box’ of State as ‘a manager of externalities’, overcomes the simplistic Market-State dichotomy, and

Gives an institutional substance to the ‘State’ (MofDefence ≠Health or environmental Ministry)


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France, a good case study : A long historical record in military

affairs : Wars under the ‘God Sun’ (Louis XIV) Napoleonic wars Imperial reach (late 19th century) Intercapitalist developed countries (20th

century) mass extermination and barbarism (2 World wars)…


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A turning point at the late 1950s : The emerging of a mighty defence industry which still

plays a core role in technology policy (and beyond) , as a combination of :

The long-standing weight of military, and return of General de Gaulle to power (1958)

The role of France in international affairs (Permanent member of the UNSC, Nuclear power)

An economic context favourable : macroeconomic domestic centered policies (cf

« French school of regulation », but also LASA) Technology policies based on large programs :

‘linear’ : from Research, Applied, Development ‘top-down’ : instrumental role of governments often

through Technological agencies


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Indicators (last year available) World Ranking GDP (est.) (IMF) (2005) 7 world merchandise trade (2005) (WTO) : Exportations Importations

5 6

world trade in commercial services (2005) (WTO) Exportations Importations

4 5

Aggregate flows of FDI 1996-2006 (OECD) Inflows Outflows Net outflows

5 4 1

Number of TNCs in the Top Global 500 (2005) (Fortune, 24/07/2006) 40 R&D : In proportion of GDP (2005) (OECD) Total (PPP*) (2002) Basic Research (2000-02) (NSF)

10 6 3

Military : Public Budget (2005) (SIPRI) Arms exports (2001-2005 aggregate total) (SIPRI) Conventional Arms Transfers to Developing Nations, (1998-2005 aggregate total) (CRS) French companies in the top 100 defense contractors (SIPRI, 2006) (ranking by country)**

3 3 3 3


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The French defence industry : a ‘Méso-systeme’ created in the late 1950s

Theoritical background : Sectoral and Technological IS, ‘Filières’ (or Méso-système) :

the economic structure is made up of ‘chains of production’, as well of backward and forward linkages that cut across the traditional boundaries of industrial activities

System rather than the individual units which it is composed of, is the primary unit of analysis

Importance of ‘non-market’ relationships between the components of the system

Allows for analysis of inter-sectoral relations between the Méso-system of armaments and others industrial sectors


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The French meso-system of armaments (FMSA)

Three major players with strong interactions : French procurement agency (DGA) Defence contractors Technological agencies (TA) , government-

owned, acting as an interface between S&T, being responsible for Large technological programs in defence, nuclear (CEA) , aerospace (CNES, ONERA) , telecommunications (CNET), ..


10Source : Author Elaboration


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Indicators Share (in %) or absolute number

1)Macro economic Indicators Military expenditures/ Total budget (2006) 11,5% Military expenditures/ GDP (2006) 1,8% 2) Manufacturing industry Indicators Aggregate arms export surplus/Aggregate equipment good surplus (1990-2006) 63% Defence consolidated turnover/Manufacturing industries turnover (2005) 18% Defence industry employees/ Manufacturing industries Value added (2005) 6,8% Number of Defence-aeronautics-nuclear companies in the Top 10 companies of the Equipment good (engineering)sector (2005)

7 (7O%)

3) Related technological innovation Indicators Public Defence R&D/Total Business R&D (2004) 24% Total R&D spending by Defence-aeronautics-nuclear companies/Total R&D spending by the Top 20 R&D French companies spending (2005)

24%

Number of R&D Defence-aeronautics-nuclear companies in the Top 20 patenting Companies in France (2006) 5 (25%)

Source : Author’s elaboration


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What effects on national competitiveness ? Strong sectoral – and geographical –

international specialisation with strong products

Sectoral diffusion from M to C in Aerospace and in telecommunications

Damaging effects on the engineering and equipment good (prof and households) . Similar findings in USA and UK, as opposed to Japan, Germany,Sweden, …


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Relevance for BRICs countries

A non-starter : « War is necessary for growth and innovation »

Need for contextualisation of the relations between defence and economy :


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The sweeping changes at the era of globalisation

1) The political economy of globalisation : a new institutional pattern (and paradigm) : from defence to security*

* absence of threats At a theoritical level : new relations between

economy (markets and private property rights) and politics (power)

At the operational level : threats are pervasive : military/civilian, public/private, economic/social


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Defence 1945-c.1990 Security c.1990-2006 Geopolitical setting Two superpowers for the

world order, and a Cold war (and also numerous wars)

One superpower, and an increase in chaos and world disorder (fragmentation/ hierarchisation)

Objectives

External threats : military, coming mainly from hostile States: Internal threats : criminality, social unrest

Threats : intertwining of external and internal insecurity : military, environmental, natural resources, criminality, migrations, social unrest, …

Military capabilities

Monopoly of legitimate coercive violence (external and internal)

- Monopoly of legitimate coercive violence - Rise of private transnational authorities (violent groups, military private companies, transborder network, …)

Provision of the ‘public good’ defence

Nation-states, UN in limited conditions, NATO for the transatlantic bloc’s members

States, private authorities (agencies of States, acting as ‘principals’, UN, NATO (global security organisation?)

Economic setting : Macroeconomic

(public)

Industrial (mesoeconomic)

Technological

Anti-cyclical (keynesian) role of defense budget National champions, managerialism (Galbraith’s technostructure) Diffusion from military civilian (1950-70), then from civilian military (1970-1990)

-Compression of military spending because of public deficits constraints (1990s), - Then rise when threats are invoked (2000s) Emerging of a ‘security economy’ ‘Transatlantisation’ of arms production, shareholder-value based governance of defence Prime contractors Integration of technologies Information and security technologies

Economic theory Defence as a ‘pure’ national public good (Samuelson, Stieglitz)

Security as a global Public good (Kaul, Sandler, …)

Epistemology

of defence : separation of disciplinary fields (economics, international relations, political sciences, sociology, …)

of security : Need for interdisciplinary research (economics, international political economy, political sciences, sociology, anthropology, …)


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Acknowledgement of globalisation as a highly uneven and differenciated process

“A broad approach to Security in the 21st Century, which recognises the importance of political, economic, social and environmental factors in addition to the indispensable defence dimension " [Washington Nato Summit, 23rd and 24th April 1999]. Preserving free access to key resources central for NATO.

“The global economy is driving the haves and the haves-not further apart, including in the United States, and the backlash against globalisation may pose a specific threat to America’s security when activities turn to riots and violence to protest multinational corporate power [Traverton, Rand Corp., U.S. House’s representative Committee on new threats emerging from globalisation, 2005, p.3]


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A Transatlantic-driven agenda The USA sets the agenda and the new (technological) race to armaments

(50% of World Milex, 75% of World Mil R&D, etc.), but The EU has entered the race… :

Through NATO ‘The European Security Strategy’ (European Council, December 2003)

“It is a mistake however, to think that soft power is a natural strength of Europe although the EU seems in some respects the apotheosis of soft power. Internally it operates by law; externally it uses force largely in peace- keeping mode. But soft power goes with hard power internationally as it does domestically”[Cooper*, 2004, p.xx]

*Former Diplomatic Adviser to T.Blair, now Adviser to J. Solana, Head of Foreign and Security Common Policy (CSFP)

Still,with a different role of the US : The European Security Strategy is “the most developed example of a

postmodern state’ and hence the better suited to implement a "postmodern imperialism“[ Cooper*, 2002, p. 15]


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2) Political economy of defence innovation : A) New strategic and technological doctrine

: The network centric Warfare (NCW) based on an extensive use of ITC :

“The U.S forces must be prepared to operate ‘deeply within societies’ and in urban areas where so-called elites generating the conflict are often based [..] Cebrowski believes the basic theories of warfare behind net-centric operations apply to all forms of conflict and competition” [Hugues, 2003].


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B) This induces a new era in relation between military and commercial technologies :

Spin-offs (or spillovers) of M to C considerably decreased from 1970s onwards; spin-in (or spin-on from C to M increased

From Plat-forms (Aircraft, Ships, Tanks …) to ‘Systems of Systems’

Prime Contractors are moving up the value chain ‘Lead System Integrators’ and ‘Service providers’ and

Become more internationalised and shareholder-value oriented


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C) Technological dynamics in defence : Requires stong organisational (including

relational) and financial capabilities Not so much producers of technologies

as Integrators of technologies developed elsewhere (SMEs, Public labs,…)


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Some proposals for a comparative perspective 1) Defence innovation capabilities are (partly) driven by

geopolitical, historical factors, military role in the world affairs, etc.

2) Relations between defence innovation and NIS are not similar over time and between countries

3) Diffusion of defence technologies in commercial sectors slowed down since the end of the 1970s

4) State impulse remains decisive for technology development, but large environmental, health programs will have more dynamic effects (and obviously welfare effects) (warfare vs welfare effects) .

5) Useful to address defence innovation in BRICS countries against the NIS and political economy of innovation

THE ROLE OF DEFENCE INNOVATION IN NATIONAL SYSTEMS OF INNOVATION : SOME FINDINGS BASED ON THE FRENCH...

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