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The Economics of National Security Policy

Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

The economy and how it is performing is integral to the national security of the United States, and not just within the military-industrial complex. Learn the difference between national security and national security policy and how a strong economy not only provides resources for national defense but also plays a key role in international relations through trade sanctions and embargoes. Updated: 10/07/2021

National Security Policy Defined

A vital role of any government is to provide for the national security of the country and its citizens. National security is the protection of a country from attack or other international threats through the use of military and nonmilitary means. National security covers a broad range of threats and includes military, economic, energy, environmental, and political threats. In fact, a direct military threat against the United States today is probably a lesser concern than threats from terrorism, cyber-attacks, pandemics, and ecological disasters. National security policy is the overall strategy a government takes to advance national security and the course of action it pursues to accomplish the strategy.

A country must have a strong economic foundation for effective national security. Let's take a look at the role that economics plays in national security policy.

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  • 0:01 National Security…
  • 1:24 Provides Resources
  • 2:12 Economic Secutiry
  • 3:21 International Relations
  • 6:15 Lesson Summary
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Provides Resources

The economy provides the resources necessary to support and advance our national security policy. It provides the money, through taxes, to build and maintain our armed forces, support our diplomatic activities, and fund our intelligence gathering apparatus, such as the activities of the Central Intelligence Agency and National Security Agency. Keep in mind that the economy not only provides the funds and raw materials needed to serve the national security interest of our nation but also an educated and skilled labor force to carry the national security policy.

Economic Security

A strong economy is necessary for a strong national security policy. You can think of the economy as affecting national security in at least two primary ways. First, few things in life are free, and this includes the resources necessary for providing for the national security of a country. The stronger the economy, the more tax revenue can be generated in order to engage in the activities necessary for strong national security. A weaker economy means less resources are available to protect the national security interest, and the country may be at risk.

Second, remember that a strong economy is not only a means to achieve strong national security but is one of the objectives to be achieved in pursuing a strong national security. A country with a strong, healthy, and growing economy advances the personal economic well-being and security of all citizens in the nation.

Role in International Relations

Economics plays a fundamental role in the game of nations and often forms the foundation with relations among countries. Sometimes international relations are about shared interests. For example, the United States has an economic interest in growing its foreign markets and thereby becoming economically stronger, and developing countries have an interest in economic growth and development. As we saw earlier, a stronger economy means more resources for a financially secure population and a solid tax base for expenditures necessary to protect the national interest.

Of course, countries may have competing economic interests, such as China and the United States fighting for market share. Competition can become aggressive when countries engage in trade wars, which is a conflict between two or more countries regarding tariffs and other trade barriers erected against each other to protect their respective domestic industries. A tariff, for example, is a special type of tax on imports that raises the costs of a foreign good so that domestic goods have an advantage.

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