The Massachusetts Defense Industry: Characteristics and Economic Impact
November 2007
The defense sector, defined in this study as commercial activity generated by U.S. defense and homeland security contracts, military personnel payroll, and retiree benefits paid to state residents, is a key driver of the Massachusetts economy. During 2005, defense sector spending in Massachusetts by federal agencies totaled $9.2 billion and generated an additional $5.5 billion in indirect spending. All told, defense sector spending impacts accounted for 4.6 percent of the state’s gross domestic product in 2005. Critical industry players in the Commonwealth include both large and small businesses. While large businesses earned the largest share of profits (68 percent of contract awards), small businesses also play an important role in the industry (earning 13 percent of Massachusetts contract awards).
