While U.S. defense budgets have recently been on the rise, it is likely that we will see a spending decline in the coming years as competition for non-defense federal budget dollars increases and deficits grow. The United States, therefore, must take action to ensure that we maintain our technological edge against our adversaries by empowering the private sector to provide cost-effective innovation for America’s defense.
Since the end of the Second World War the U.S. has relied on qualitative superiority over its potential adversaries, especially those like the Soviet Union/Russia and China, who enjoyed comparative quantitative advantages. These qualitative advantages were vital to maintaining global stability and helped enable our nation to become the preeminent global economy, but they have been eroded over the last few decades.
In 1960, the U.S. share of global research and development (R&D) spending stood at 69%. U.S. defense-related R&D alone accounted for 36% of total global expenditures. Soon thereafter other nations recognized the need to increase their R&D expenditures and build their own defense industrial bases to compete with the United States. From 2000-2016, China’s share of global R&D rose from 4.9% to 25.1% while the U.S. share of global R&D dropped to 28%. U.S. defense-related R&D meanwhile now makes up a mere 4% of global R&D spending.
There can be no doubt that Russia and China are determined to challenge America’s qualitative advantage. From the rebirth of Russian military power under Vladimir Putin to the ever-growing Chinese military prowess across the board, their efforts show no sign of slowing down.
Russia has been and continues to undergo a major modernization of its armed forces. For example, they are in the midst of a ten-year program to build hundreds of new nuclear missiles and have set a goal of modernizing 70% of the Russian Ground Force’s equipment by 2020.
One of the most frightening examples of Russia’s resurgence is its development of a hypersonic missile that could be ready for combat as early as 2020. Worryingly, the US is currently unable to defend against this type of missile. To accompany these developments came the emergence in 2017 of Russia as the world’s second-largest arms producer, ready and able to support nations hostile to US interests.
China, on the other hand, used to be a country that only manufactured cheap products and knockoffs, but that is no longer true. Technology development and innovation figure prominently in all of China’s national planning goals, with plans to make the country the global leader in science and innovation and the preeminent technological and manufacturing power by 2049, the 100th anniversary of the Chinese communist revolution.
This, of course, has huge implications for China’s military capability. The country now has the second-largest national defense budget behind the U.S. and wants to be Asia’s preeminent military power. Beijing is developing next-generation fighter jets, ICBMs and shorter-range ballistic missiles, as well as advanced naval vessels.
The People’s Liberation Army has reached a critical point of confidence and now feel they can match competitors like the United States in combat. This has implications for the security of Taiwan, Japan, other US allies in the region as well as to America itself. To make matters worse, there are a growing number of experts that see China developing asymmetric technologies, combined with conventional and nuclear systems that could create an existential threat to the U.S. pacific based assets.
It is in the wake of these growing threats to our national security American industry will likely be expected to shoulder an even larger responsibility concerning investment in defense-related R&D.
One of the ways we can empower companies to make these additional investments and lead next-generation defense innovation is to allow commonsense mergers between important defense and aerospace companies. Horizontal consolidation eliminates the redundancy of enormous fixed costs, leading to savings passed down to customers. Mergers can also create economies of scale and existing synergies that help the combined company realize access to larger numbers of engineers and innovators, while keeping costs low and improving the timeline for taking a product from concept to development.
A recent example of how this can work is the proposed Raytheon and United Technologies merger. The two parties project that the new combined company will employ more than 60,000 engineers, hold over 38,000 patents and invest approximately $8 billion per year in research and development. This will allow the development of new, critical technologies more quickly and efficiently than either company could on its own. Such private sector investments in innovation will be critical in the face of the growing challenges to American military dominance.
America’s R&D advantage, crucial to maintaining military superiority, is increasingly at risk. As China and Russia continue to challenge America’s military dominance and pressures on the defense budget continue to mount, the federal government will likely turn more and more to contractors and commercial companies to develop next-generation defense capabilities. Strengthening U.S. industry, therefore, will be critical to countering our national security challenges.
Michael Marks is the former Senior Policy Advisor to the Under Secretary for Security Assistance, Science and Technology at the U.S. Department of State.
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