33 Pages Posted: 2 Oct 2015 Last revised: 22 Feb 2016
Date Written: September 30, 2015
U.S. military contracting has been plagued by systematic corruption, fraud, and waste during both times of peace and war. These outcomes result from the inherent features of the U.S. military sector which incentivize unproductive entrepreneurship. The military sector is characterized by an entangled network of government bureaus and private firms whose existence is dependent on continued government spending. These realities, coupled with dysfunctional procurement processes, reward unproductive behaviors during peacetime. During wartime these incentives are intensified, as significant emergency resources are injected into an already defective contracting system. Together, these factors create a magnetic force which attracts unproductive entrepreneurs like bees to honey. The recent experiences in Afghanistan and Iraq illustrate these dynamics.
Keywords: Afghanistan, Contracting, Cronyism, Corruption, Iraq, Unproductive Entrepreneurship
JEL Classification: H40, H56, H57, L26
Suggested Citation: Suggested Citation
Coyne, Christopher J. and Michaluk, Courtney and Reese, Rachel, Unproductive Entrepreneurship in U.S. Military Contracting (September 30, 2015). GMU Working Paper in Economics No. 15-50. Available at SSRN: https://ssrn.com/abstract=2667905