How economic security is shaping science, technology and industrial policy

Economic security is increasingly intertwined with science, technology and industrial (STI) policy. As countries seek to protect their economic stability and growth and strengthen their resilience, they are increasingly turning to instruments of STI policy to develop domestic capabilities in emerging science and technology-based industries, strengthen their competitiveness in strategic industrial sectors, manage international flows of scientific and technical knowledge, and reduce  unwanted dependencies in global value chains.  

These objectives are reshaping policy across the full breadth of the modern economy: from artificial intelligence and quantum technologies to semiconductors, steel, shipbuilding, digital infrastructure, data governance and research collaboration.  They are positioning STI policy as a central feature of broader economic policy, as well as of international relations in a changing geopolitical context. 

Although the policy challenges differ across various domains of science, technology, and industry, they raise a common question: how can countries manage strategic dependencies and strengthen resilience while preserving the openness and international co-operation on which innovation — and ultimately economic prosperity — depends? 

Few areas illustrate the growing intersection of economic security and STI policy better than frontier technologies. AI is now viewed not only as a general-purpose technology, but as a strategic capability with implications for productivity, economic competitiveness and national security. 

This changing perspective is reflected in the scale of investment.  AI continues to attract a growing share of private investment.  AI firms accounted for 62% of global venture capital investment in 2025, or USD 276 billion out of a total USD 448 billion, more than double their share since 2022. In the first half of 2026, AI-related investments rose to over 85% of all VC. Since 2023, investment has been particularly concentrated in IT infrastructure and hosting, which attracted USD 123.9 billion in 2025 alone. Alongside this private investment, sustained public investment in R&D is increasingly seen as a strategic tool for advancing cybersecurity, defence and strategic intelligence. 

Together, these investments suggest that competition in AI is not confined to models and applications. It also extends to the infrastructure and research capabilities needed to develop and deploy the technology. 

A similar pattern is emerging in quantum technology. The quantum landscape has expanded rapidly over the past decade, with rising firm entry, increasing investment and strong growth in innovation across quantum communication, computing and sensing. Annual funding for quantum R&D increased more than fivefold across 19 OECD countries between 2015 and 2023, reflecting growing recognition of the technology’s potential to transform sectors from chemicals to telecommunications and defence. 

These developments present governments with a set of strategic choices. As global value chains for frontier technologies like AI and quantum span national borders, countries must decide which capabilities to develop domestically, which to source from trusted international suppliers, and how to structure cross-border collaboration. The objective is not simply to compete, but to ensure reliable access to critical technologies while preserving the benefits of international knowledge, investment and co-operation.  

Achieving this balance is a challenge. Efforts to strengthen domestic capabilities and reduce vulnerabilities can support resilience, but they can also fragment innovation ecosystems if pursued without sufficient regard for international interdependence.

Capabilities in frontier technologies depend on access to the inputs and infrastructure that make them possible. Critical minerals feed semiconductor production, while advanced chips support progress in fields such as artificial intelligence. Economic security therefore requires not only investment in emerging technologies, but also a clear understanding of concentration and dependency across their value chains. 

Semiconductors illustrate the scale of the challenge. A mapping of semiconductor value chains shows that inputs for semiconductors are concentrated in few economies and that OECD Members face a growing number of critical trade dependencies. The number of such dependencies reached 49 between 2020 and 2022, around 60% involving China, up 53% compared to 2012 to 2014. Around 90% of global wafer fabrication capacity is concentrated in five economies, while more than half of leading-edge logic chips are produced by a single company in Chinese Taipei. 

These concentrations do not mean that countries can (or should) seek to produce every input domestically. They do, however, underline the importance of understanding where dependencies lie, what vulnerabilities they may create and how resilient and trusted global supply chains can be maintained during periods of disruption or geopolitical tension. 

Semiconductors are one prominent example, but dependencies extend across the economy. The OECD’s Inter-Country Input-Output tables and Trade in Value Added indicators help countries identify economic dependencies and potential vulnerabilities. Recent data show that domestic demand in OECD countries continues to depend substantially on production outside the OECD area. 

This evidence can help policymakers distinguish between interdependence, which remains integral to modern production, and concentrations that may create significant vulnerabilities. It can also support more targeted approaches to resilience, rather than broad efforts that may reduce international economic integration. 

Economic security concerns are not confined to frontier technologies and industries of the future. They also extend to longstanding, capital-intensive sectors such as steel and shipbuilding that are seen as strategically important. 

Steel remains fundamental to modern economies, accounting for around 5 to 7% of manufacturing output across OECD countries. It is an essential input into construction, infrastructure, transport and energy systems, giving countries a strong incentive to maintain viable steelmaking capabilities. 

Yet the sector is under increasing strain. Global steelmaking capacity is projected to increase through 2027, even as demand grows by less than 1% annually. Excess capacity is consequently expected to exceed 700 million tonnes by 2027—more than the combined production of OECD Member countries. This excess capacity puts downward pressure on profit margins, threatens the viability of firms and contributes to trade tensions and trade diversion. 

OECD analyses indicate that market-distorting subsidies contribute to the problem by sustaining capacity that might otherwise be uncompetitive. Chinese steel firms, on average, receive fifteen times as much government support as steel firms in OECD countries. The challenge for governments is therefore not only to preserve industrial capacity, but also to address the market conditions and forms of support that affect its long-term viability. 

Shipbuilding raises related concerns. The sector enables international trade, supports defence capabilities, and contributes to economic output and employment. It is also highly concentrated: around two-thirds of ship orders in 2025 were placed at Chinese yards.  

OECD analysis indicates that government support has contributed to this competitive position.  Total subsidies to the global shipbuilding sector including grants, income tax concessions reached USD 1.5 billion in 2023, up from USD 1.35 billion in 2022, with Chinese companies accounting for USD 1.3 billion, or 83% of the total.  

Steel and shipbuilding therefore illustrate a broader economic-security challenge. Governments may have legitimate reasons to maintain capabilities in strategically important industries, but policies to do so must also account for excess capacity, production concentration and the effects of market-distorting support.  There are opportunities for countries to work together and take common approaches that will restore market discipline and a level global playing field.

Economic security also depends on digital infrastructure. Broadband networks, international communications links, data centres and cloud infrastructure provide much of the foundation on which modern economies operate. Financial transactions, health systems, scientific collaboration and global supply chains all rely on secure and reliable digital networks. 

As economies become more data intensive and the adoption of AI accelerates, disruptions to connectivity can have consequences that extend well beyond the digital sector itself. Digital infrastructure has therefore become critical infrastructure, underpinning economic growth, innovation, competitiveness and therefore economic security. 

Data moving through this infrastructure have also acquired growing strategic importance. Control over large datasets can confer competitive advantages, while population and health data are increasingly treated as strategic assets. At the same time, cross-border data flows underpin economic activity at every level: from critical digital services and health research to statistical systems and access to global markets for firms of all sizes. 

The scope of cross-border data regulation is consequently expanding. Whereas such regulation historically focused primarily on personal data and individual privacy, it now covers a broader and growing array of data types and is increasingly influenced by national security, artificial intelligence, and competition concerns. 

By early 2023, nearly 100 explicit data localisation measures were in place across 40 countries, more than half of them introduced in the past decade. More than two thirds combined a domestic storage requirement with a flow prohibition, signalling a move toward increasingly restrictive approaches to cross-border data governance. 

These developments sharpen the policy trade-off. Countries need to protect sensitive data and maintain secure, reliable digital infrastructure. But restrictions that unnecessarily impede data flows may also limit access to services, markets, knowledge and international research collaboration. As in other areas of economic security, the challenge is to strengthen protection and resilience without creating avoidable fragmentation. Pursuing data free flows with trust offers a framework for addressing these trade-offs. 

Research security has become a defining feature of the STI policy landscape. It encompasses measures intended to protect sensitive research and reduce the risks of foreign interference. 

Too little security can expose sensitive research and academic partnerships to foreign interference, ultimately eroding safety and trust. But over-securitisation carries its own risks. Measures that are too broad and poorly targeted can weaken research quality, impede innovation and fragment international collaboration on shared global challenges. 

The rapid growth in research-security policies demonstrates the scale of this shift. In 2025, countries reported about 250 such measures, nearly ten times more than in 2018, with the number of countries adopting them rising from 12 to 41. This rapid expansion marks a significant shift in a scientific and technological landscape long characterised by international collaboration. 

The challenge is to protect what is sensitive without sacrificing the benefits of openness. The OECD's "3Ps" framework identifies three broad objectives for policy intervention: the promotion of strategic capabilities, the protection of sensitive research and the projection of national interests through international engagement. These objectives are complemented by three guiding principles: proportionality, precision and partnership. Together, they provide a basis for designing measures that respond to genuine risks while limiting unintended consequences for scientific excellence and collaboration. 

Taken together, these developments point to a broader shift in science, technology and industrial policy.  Economic security considerations now influence decisions about frontier technologies, critical inputs and supply chains, industrial capacity, digital infrastructure, data governance, and research collaboration. 

Across these different domains, the task ahead is not to retreat from interdependence, but to manage it more strategically. This means identifying over-concentrations and vulnerabilities, strengthening resilience and protecting sensitive capabilities, while preserving the openness and international connections that support scientific progress, innovation and economic growth.  

No country can address these challenges entirely on its own. Frontier technologies draw on globally distributed knowledge and investment. Industrial value chains cross multiple jurisdictions in search of market efficiencies and specialisation. Digital networks and data flows operate internationally. Scientific research depends on collaboration among institutions, firms and researchers across borders. 

International co-operation is therefore not separate from economic security. It is one of the conditions for achieving it. Co-operation can help countries improve transparency, compare policy approaches, strengthen the reliability of supply chains and infrastructure, and avoid measures that merely shift vulnerabilities or fragment innovation ecosystems. 

The OECD has an important role to play in supporting countries through this transition. It can provide the evidence base to identify dependencies and concentration in global value chains, help governments compare approaches to research security and other emerging policy challenges, and offer a forum for like-minded countries to develop shared approaches for advancing frontier technologies such as AI and quantum technology. 

Economic security is changing the choices governments make about science, technology and innovation. The measure of success will not be whether countries can insulate themselves from an interconnected world, but whether they can make that interdependence more resilient, secure and capable of supporting innovation.