Publication

The paper investigates the trade-off between innovation and defense industrial policy. It presents an agent-based simulation model calibrated for the Norwegian defense industry that compares different policy scenarios and examines the effects of a pending EU market liberalization process. The paper finds that a scenario where national authorities focus on either international competitiveness or national defense and security objectives, is more Pareto efficient than a mixed strategy where policy makers pursue both international competitiveness and defense and security objectives. Under the conditions of the new EU liberalization regime, a stronger and more visible trade-off will emerge between international competitiveness and national defense and security objectives.