Danish Draghi report wants to fivefold investments in defense research

Innovation tripartite and more risk in pension investment are among the recommendations in the Danish competitiveness report.

The government’s defense strategy of ‘buy, buy, buy’ should be more like ‘innovate, innovate, innovate’ as the defense budget increases.

This is one of the recommendations in a major report on Denmark’s competitiveness, which will be presented on Wednesday under the title ‘Much more research’ at a conference at Christiansborg Palace. The report was prepared by the think tank Pomus in collaboration with the auditing and consulting firm Deloitte and with support from the Danish Industry Foundation.

The project is inspired by the so-called Draghi and Letta reports, which last year drew much attention to the EU’s lagging position in relation to the US and China when it comes to investments and jobs. The Danish version includes 10 recommendations for Danish politicians, who are coming together in a 2040 strategy that will “integrate research, innovation, technology and security”.

And this must be done, among other things, by investing a much larger part of the defense budget in research and innovation. Specifically, 2.5 percent of defense spending should go to research and development, according to one recommendation, which is a fivefold increase compared to today.

“By allocating 2.5 percent of the increasing defense spending to knowledge, innovation and technology, we can lay the foundation for building a strong defense industry in Denmark and Europe,” says Chief Economist at Deloitte Majbritt Skov in a press release.

“This need is only amplified in light of the hybrid and high-tech threat landscape we face today,” it continues.

According to the report, Denmark has the opportunity to “build positions of strength and reduce critical dependencies” when it comes to defense and security technologies.

Innovationstrepart

The report also suggests that the green tripartite should be the inspiration for an innovation tripartite. It should be run by the Ministry of Education and Research, the Ministry of Business and Industry and the Ministry of Defence. The innovation tripartite should, among other things, be responsible for implementing the money from the defence budget earmarked for research and innovation.

There is also a focus on the pension assets of Danes among the recommendations. The authorities should explore the possibility of an agreement with Danish pension companies that at least 2.5 percent of Danes’ pension funds should be invested in risk-averse technology and innovation. An increased risk profile will partially solve the challenge of capital flight to the United States, it says.

“If we shake things up, there are plenty of opportunities to pave the way for a technology-driven research and innovation culture here at home. We have all the ingredients, but a national strategy is needed to gather and utilize them,” says Pomus founder Kaare Nielsen.

At the conference at Christiansborg on Tuesday morning, there were speeches from, among others, Minister of Education and Research Christina Egelund (M), Minister of Business and Industry Morten Bødskov (S), and Italy’s former Prime Minister Enrico Letta, who was behind the Letta report.

ritzau