Abstract
Although some analysts have argued that defense spending has undermined US competitiveness, this argument is not supported by the evidence. Commercial research apparently has not been squeezed out by defense spending, because the research and development (R&D) market in the US is predominantly a commercial labor market. Defense spending is not to blame if commercial R&D is unable to attract enough professional and technical workers. Although states with substantial defense contracts or employment in defense-related industries tend to have high proportions of high-technology employment, there is no statistically significant association between defense activity and employment in high-tech industries that do not depend heavily on defense spending. States that have substantial defense-related industries and commercially oriented high-tech industries have more diverse defense establishments than defense-oriented states without commercial high-tech industries.