Mobilizing Private Capital for Defense: Tactics and Recommendations : National Defense Industrial Association , March , 2026
March 2026
National Defense Industrial Association
Mobilizing Private Capital for Defense: Tactics and Recommendations : National Defense Industrial Association , March , 2026
March 2026
National Defense Industrial Association
From the report: "America’s capital markets are the largest and most sophisticated in the world, a major force driving the development of new technologies and the expansion of U.S. industrial capacity. For the U.S. defense industrial base (DIB) and dual-use sectors, private capital is a critical source of financing and investment; available indicators suggest roughly $440B in private capital activity from 2020 to 2024.1 However, the global context is challenging: as a share of GDP, China sustains an economy-wide investment rate roughly twice that of the U.S., supporting its growing industrial capacity. With the appropriate combination of policy and process changes, the Department of Defense (DoD) could engage even more investment, bringing more resources to bear on DoD priorities.
DoD’s levers for engaging private capital fall broadly into three categories: providing demand signal, catalytic capital, and a healthy business environment. These levers are most effective when combined. Stronger demand signals reduce the amount of catalytic capital required to encourage investment, and a healthy business environment makes the sector more attractive to investors overall. Interviews and case studies from this research report show that major opportunities exist to engage private capital: for example, DoD’s Critical Chemicals Pilot leveraged a 25:1 ratio of private-to-public dollars (about $177M in private capital) by aggregating its demand signal with commercial chemical buyers.
Despite its essential role, private capital is a complement of, and not a replacement for, an adequate and predictable defense budget. A strong DIB depends on industry, the investment community, and the Department working collaboratively on shared objectives."
Authors - Moyer, SamSubjects
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