The defence sector could play an important role in the country's economic recovery, says Christian de Boissieu. It does not relocate. It creates skilled jobs. A defence stimulus plan would help to strengthen security and sovereignty, while stimulating private investment.
The current crisis is affecting the French economy on a scale not seen since 1945: the recession is both unstoppable and deep. All sectors are affected. The extent of the rebound will depend, among other factors, on the government's ability to support the recovery, which will require a recovery plan at both national and European levels. The challenge then is to identify the relevant sectors.
By hypothesis, the defence sector is geared towards security and sovereignty, at a time when these values are being strongly asserted. It could also play an important role in boosting the country's economy. The defence industrial sector has not relocated, so it does not have to relocate like other strategic activities. It creates a large number of skilled jobs. Defence companies play a central role in the national innovation system. Their civil and defence activities account for 25TP3T of the R&D carried out by French companies. They also file a large number of patents, with several defence companies ranking in the top 10 of patents filed with Inpi every year, and they play a major role in structuring research networks.
Operational efficiency
A recovery plan that includes defence would have a significant economic impact, reinforced by the military/civilian duality of defence activities. Spending on military equipment or R&D is capital expenditure; it generates spin-offs that stimulate productivity.
For strategic reasons, production and research chains are also more national than in the rest of the economy. Studies show that these specific features are reflected in the high multiplier effect of public spending (GDP impact multiplier of around 2 after ten years). They also show that, far from displacing private investment, spending on military equipment or defence research complements it. Funding defence R&D would therefore support French research at a time when it is about to be severely affected.
What's more, defence-led recovery not only does not worsen the trade balance, unlike many sectors, but actually improves it by stimulating research, increasing the efficiency of production processes and enhancing the operational efficiency of French military equipment in the eyes of the outside world.
In addition, the defence technological and industrial base has always had a strong local dimension, contributing to regional planning and maintaining activity in many underdeveloped industrial areas. This proximity would only be strengthened by a revival that also, and not exclusively, involves defence.
Stimulating private investment
Such a relaunch must first and foremost be national, but it must be accompanied by a European Union initiative. This is a unique opportunity to finally get European defence off the ground. The initial proposal for a budget of €13 billion for the European Defence Fund over the next six years, i.e. less than 1 % of the EU budget, must be retained at a time when other continents are steadily increasing their defence spending.
A defence stimulus plan would strengthen our security and sovereignty, while stimulating private investment and civilian research, and having a significant economic impact. These are all necessary elements in the coming period.
Christian de Boissieu is Chairman of the Scientific Council of the Economics of Defence Chair - IHEDN and a member of the Cercle des économistes.
Article on the Les Echos website: https://www.lesechos.fr/idees-debats/cercle/opinion-un-plan-de-relance-pour-la-defense-1204431
