America’s New Defence-Tech Industry as a Model for Europe

Europe’s defence technology sector is facing growing pressure to adapt as geopolitical shifts and transatlantic tensions reshape global defence innovation, according to a recent commentary by The Economist.

The publication argues that the United States’ emerging defence-tech ecosystem should serve as a model for European nations seeking to strengthen their own industrial and technological base in response to evolving security challenges.

US Defence Innovation Driven by Private Sector Alignment

The United States has seen a significant expansion in defence-focused startups, particularly in areas aligned with national security priorities. As of 2023, there were 110 startups working on autonomous systems, 84 focused on space technology, and 134 engaged in advanced computing and software development within the defence sector.

This growth reflects a broader trend where private innovation is increasingly directed toward state defence objectives, fueled by the strategic competition with China in artificial intelligence and autonomous systems. The Economist notes that both the US and China now regard AI and autonomy as critical components of future military power.

Institutional Innovation Through the Executive Innovation Corps

A key development highlighted in the analysis is the creation of the Executive Innovation Corps, a new unit within the US Army Reserve designed to integrate senior technology leaders into defence modernisation efforts on a part-time and remote basis.

This initiative allows experienced professionals from the private sector to contribute expertise without requiring full-time military service, representing a novel approach to bridging civilian technological advancement with military application.

European Defence Industry Faces Structural Challenges

In contrast, European defence firms continue to operate under a more fragmented landscape. According to data cited in February 2026, US defence companies account for nearly half of global defence sales, while European firms collectively represent just under one-quarter of the market.

The disparity is being exacerbated by shifting geopolitical dynamics, including strained transatlantic relations and evolving European Union policies that may limit access for US firms to European markets unless they adapt their operations.

At the same time, the ongoing war in Ukraine has positioned European countries closer to active conflict zones as valuable testing grounds for military innovation, potentially benefiting regional firms that can leverage proximity to frontline developments.

Venture Capital and Open Source Reshaping Defence Innovation

Venture capital is increasingly flowing into European defence startups and a select number of US-based emerging firms, supported by the accessibility of open-source software and faster technology development cycles that lower barriers to entry for new entrants.

This environment enables agile companies to challenge established defence contractors, though analysts caution that Europe’s path toward greater technological sovereignty remains complex due to long-standing dependencies on US systems and industrial partnerships.

The Economist concludes that while full decoupling from US defence technology is unlikely in the near term, Europe must pursue deliberate reforms to strengthen its industrial base, foster innovation, and reduce vulnerabilities in critical supply chains.