A look at the economic impact of military-related spending across Louisiana – Baton Rouge Business Report

Report on the Economic Impact of Louisiana’s Defense Sector and its Contribution to Sustainable Development Goals (FY 2024)

Executive Summary

A statewide analysis for fiscal year 2024, released by Louisiana Economic Development (LED), indicates that military-related spending generated over $17 billion in total economic activity. This report details the significant expansion of the state’s defense sector, highlighting its direct contributions to achieving key Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 11 (Sustainable Cities and Communities).

Key Economic Indicators and Alignment with SDG 8: Decent Work and Economic Growth

The defense sector’s performance demonstrates substantial progress toward fostering sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. Key performance indicators since the 2021 analysis include:

• Economic Output: A 77% increase in total military-related economic output, contributing directly to SDG Target 8.1 (Sustain per capita economic growth).
• Employment: The sector supports over 117,000 jobs, marking a 52% increase in employment. This expansion provides stable and productive employment opportunities, aligning with SDG Target 8.5.
• Public Revenue Generation: The economic activity generated $707 million in state and local tax revenues, providing critical funding for public services that enhance community well-being and sustainability.

Fostering Innovation and Resilient Infrastructure (SDG 9)

The report underscores how defense-related industries are a catalyst for investment in innovation, technology, and resilient infrastructure, which are central to SDG 9. Recent developments exemplify this trend:

1. Advanced Shipbuilding: Bollinger Shipyards was awarded a major U.S. Navy contract to construct six Arctic Security Cutters, reinforcing Louisiana’s role in advanced maritime manufacturing and industrialization.
2. Aerospace Innovation: VRC Metal Systems is investing in a new maintenance facility at Barksdale Air Force Base. This project introduces advanced repair capabilities for B-52 aircraft and creates high-skilled engineering and technician jobs, fostering technological upgrading and innovation.
3. Enhanced Manufacturing Capabilities: Bascom Hunter, a provider of technical solutions for the aerospace and defense industry, is expanding its Baton Rouge operations with a new fabrication facility, directly contributing to building resilient infrastructure and promoting sustainable industrialization.

Supporting Sustainable Communities and Veteran Well-being (SDG 11 & SDG 16)

The analysis expanded its scope to capture the full economic impact of veterans, revealing their significant contribution to building inclusive, safe, and sustainable communities.

• Veteran Economic Impact: Louisiana’s 260,000 veterans and 26,000 military retirees are integral to local economies. Their combined expenditures and related state contracts generated:
  • $5.6 billion in economic output.
  • Support for over 35,000 jobs statewide.
• Regional Development: The economic footprint of the military extends across all eight of the state’s defined regions, ensuring that growth and development are geographically inclusive and support communities throughout Louisiana, in line with the principles of SDG 11.
• Institutional Partnerships: The analysis itself, a collaboration between LED, the Louisiana Military Advisory Council, and expert consulting groups, exemplifies the effective partnerships (SDG 17) required to monitor and advance sustainable development.

Analysis of Sustainable Development Goals

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article is fundamentally about economic growth and job creation driven by the defense sector in Louisiana. It explicitly mentions “$17 billion in total economic activity,” a “77% increase” in military-related output, and the support of “more than 117,000 jobs.” These points directly align with the goal of promoting sustained, inclusive, and sustainable economic growth and productive employment.

• SDG 9: Industry, Innovation and Infrastructure

  The report highlights the “significant expansion of the state’s defense sector” and its role in attracting investment and supporting “innovation across sectors, including advanced manufacturing, aerospace and technology.” Specific examples, such as VRC Metal Systems investing in a “new maintenance facility” and Bascom Hunter building a “new fabrication facility,” point to the development of resilient infrastructure and the promotion of industrialization and innovation.

• SDG 11: Sustainable Cities and Communities

  The economic activity described has a direct impact on community development. The article notes that the defense sector’s expansion impacts “community development” and generates “$707 million in state and local tax revenues.” This revenue is crucial for funding public services and infrastructure, contributing to the sustainability of communities across the state’s “eight defined regions.”

• SDG 16: Peace, Justice and Strong Institutions

  While the article focuses on the economic outcomes, the spending itself is for military and defense purposes. This inherently relates to SDG 16, which includes building effective, accountable, and inclusive institutions at all levels. The investments in military bases, defense contracts, and companies like Bollinger Shipyards contribute to strengthening the national institutions responsible for security and defense, as referenced in the goal of keeping “Louisiana at the forefront of America’s defense.”

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.
   • The article provides direct evidence of significant economic growth in Louisiana’s defense sector, stating that “total military-related output has increased by 77%” since 2021 and generated “$17 billion in total economic activity” in fiscal year 2024. This reflects a strong contribution to the state’s overall economic growth.
2. Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.
   • The article emphasizes innovation and technological upgrading. It mentions that defense-related industries “support innovation across sectors, including advanced manufacturing, aerospace and technology.” The investment by VRC Metal Systems in a facility with “advanced repair capabilities” and the creation of “high-skilled engineering and technician jobs” are clear examples of achieving higher productivity through technology.
3. Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries.
   • The “significant expansion of the state’s defense sector” and the fact that “employment tied to defense activity has risen by 52%, supporting more than 117,000 jobs” directly address the goal of raising an industry’s share of employment and economic output.
4. Target 16.a: Strengthen relevant national institutions… to build capacity at all levels… to prevent violence and combat terrorism and crime.
   • The entire focus of the article is on military-related spending. The awarding of a “major U.S. Navy contract” to Bollinger Shipyards and the “$3 billion in Department of Defense and Coast Guard projects” are direct investments aimed at strengthening the national institutions responsible for defense and security.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator for Target 8.1 (Economic Growth):
   • The article provides several quantitative measures that can serve as indicators of economic growth. These include:
     • Total economic activity: $17 billion in fiscal year 2024.
     • Growth in economic output: 77% increase in total military-related output since 2021.
     • Value of government contracts: Over $3 billion in Department of Defense and Coast Guard projects in 2024.
2. Indicator for Target 8.5 (Full and productive employment):
   • Progress towards employment goals can be measured by the following data points mentioned in the article:
     • Total jobs supported: More than 117,000 jobs.
     • Growth in employment: 52% rise in employment tied to defense activity since 2021.
     • Jobs supported by veteran spending: More than 35,000 jobs.
3. Indicator for Target 9.2 (Industrialization):
   • The article implies indicators for measuring the scale of industrialization in the defense sector:
     • The number of jobs supported (117,000) as a share of the state’s total employment.
     • The total economic output ($17 billion) as a share of the state’s GDP.
4. Indicator for Community Development (related to SDG 11):
   • The article provides a direct financial indicator for the contribution to local communities:
     • State and local tax revenues generated: $707 million.

Table of SDGs, Targets, and Indicators

Source: businessreport.com