Military R&D and Civilian Spillovers
Open vs. Closed Systems from the Cold War to the Present
Military research and development (R&D) has historically been a powerful engine for civilian innovation, but the scale of spillovers has varied dramatically between “open” and “closed” systems. During the Cold War, open systems such as the United States and its NATO allies produced breakthrough technologies – from the internet and GPS to semiconductors and jet engines – that transformed the civilian economy[1][2]. In contrast, closed systems like the Soviet Union achieved formidable military capabilities but failed to translate defense investments into broad civilian benefits, due to factors like secrecy, rigid state control, and weak linkages to the consumer economy[3]. Key institutional conditions emerged as decisive: vigorous universities, dynamic private firms, venture capital, and flexible procurement proved critical in enabling dual-use innovation in open societies. Today, with a new global rearmament cycle (2022–2035) underway, both open democracies and more closed or hybrid models (e.g. post-2010 China) are pouring resources into emerging fields – artificial intelligence, quantum technology, space, cyber, energy, advanced materials – that could spur the next wave of civilian tech revolutions. This report analyzes historical cases to identify when and how defense R&D produces civilian windfalls, and assesses contemporary defense innovation drives. For policymakers and investors, the findings highlight that defense R&D can catalyze competitive advantages and economic growth – but only under conditions that foster open collaboration, commercialization, and talent circulation. The ongoing surge in defense innovation spending could yield transformative civilian applications, provided that lessons from past successes (and failures) are heeded.