An increase in government investments in Europe’s defense industry could harm the region’s economy in the long term, Politico warns.
The expansion of the military sector is occurring amid already high levels of public debt and will likely require a reallocation of budgetary resources at the expense of other areas.
As Politico notes, although arms production contributes to GDP growth, it does not lead to sustainable increases in productivity:
Landmines buried in the ground or howitzers stored under covers in barracks do not enhance economic efficiency. They may protect a system that generates GDP, but they do not themselves make a measurable contribution, the article states.
Nevertheless, there remains hope that, in the long run, military investments could spur technological innovations that might find civilian applications and improve labor productivity.
However, in the short term, analysts warn that Europe will face economic strain. Defense spending is expected to rise at the cost of reductions in other areas of public expenditure.
