Key Takeaways:
- The Pentagon has named Elon Musk, Palmer Luckey and Newt Gingrich to help lead Project Meridian and created an Autonomous Warfare Command, underscoring the merger of commercial technology with national-security strategy.
- Efficiency-driven globalisation is giving way to security-driven decisions, prompting firms to duplicate production bases and accept higher costs for more resilient supply chains.
- As AI, semiconductors and robotics become instruments of national power, investment and industrial ecosystems will increasingly follow security logic, reducing global economies of scale.
The Pentagon has officially appointed Elon Musk, together with Anduril founder Palmer Luckey and former US House Speaker Newt Gingrich, to help lead Project Meridian, an initiative examining the future battlefield and the technologies that will shape military capabilities. At the same time, the Pentagon has established the Autonomous Warfare Command, a new command focused on autonomous systems, robotics, drones and artificial intelligence.
These two developments and the two projects provide a glimpse into the future of the global economy. The growing alignment between the Pentagon and Elon Musk shows that technology is no longer merely an engine of economic growth. In their hands, technology is increasingly becoming part of national security strategies, industrial power and geopolitical positioning. And when technology becomes an arena of strategic competition, the structure of the global economy begins to change.
From efficiency to security
For several decades, globalisation was built around a central principle: efficiency and quality management. Businesses sought production locations with the lowest costs, competitive labour, adequate infrastructure and broad access to markets and supply chains. As a result, industrial ecosystems became distributed across multiple countries.
A single product, for example, could be designed in the United States, use components from Taiwan, be manufactured in China, assembled in Vietnam and then marketed around the world. This model generated enormous efficiencies.
But efficiency-based globalisation now faces new challenges. Geopolitical tensions and global disruptions — from the pandemic and the Russia-Ukraine war to US-China tariff disputes, supply-chain disruptions and technological competition — have demonstrated that the cheapest supply chain is not necessarily the safest one.
Companies will increasingly choose production locations based not only on efficiency, but also on security. Many businesses are likely to seek alternative production sites in case a particular country or supply chain is disrupted.
The consequence is that the global economy becomes more expensive. This transformation comes with a price. If a company previously needed only one highly efficient production centre, it may now need two or three production bases. That means more factories, larger inventories, more suppliers and greater investment.
At that point, economies of scale at the global level may begin to decline. The world may gain more secure supply chains, but at a higher cost. This is likely to become one of the major dilemmas facing the global economy in the years ahead.
Elon Musk is only a symptom
Musk’s involvement in Project Meridian is significant not simply because of his profile or his background in the technology industry. He represents the increasingly blurred boundary between commercial technology companies and the strategic interests of the state.
SpaceX, for example, has developed rocket and satellite capabilities with both civilian and strategic defence applications. Tesla is at the forefront of electric vehicles. Meanwhile, Musk’s broader corporate ecosystem is connected to artificial intelligence, robotics, satellite communications and advanced manufacturing.
The Musk phenomenon therefore reflects a broader transformation in which technology companies are increasingly becoming part of the strategic infrastructure of national defence and security.
The Pentagon itself has argued that advances in technology and AI, together with cheaper computing, superintelligence and advanced commercial manufacturing, are enabling the development of highly precise strike systems at lower costs.
This has important economic consequences. When the same technologies can serve both consumers and national defence, government investment in defence technology can create spillover effects across civilian industries. AI, robotics, semiconductors, satellites, sensors, batteries, cloud computing and automated manufacturing could all benefit from this investment.
Companies will also seek alternatives in case a particular country or supply chain is disrupted. The consequence is again a more expensive global economy. If a company previously needed only one highly efficient production centre, it may now require two or three production bases. That means more factories, larger inventories, more suppliers and greater investment.
This is where the implications for global economies of scale become clear. A 2026 NBER study on AI and economic fragmentation finds that geoeconomic fragmentation can slow the international diffusion of AI, increase trade costs, restrict technology and data flows, and reduce cross-border investment and collaboration. In other words, the world may obtain more secure supply chains, but the price it pays may be higher.
From Elon Musk to a new chapter for the global economy
Ultimately, Elon Musk’s involvement in the Pentagon’s projects is only an entry point for understanding a much larger transformation. The world is moving towards a situation in which technology can no longer be clearly separated from defence, industry and geopolitics.
As AI, semiconductors, satellites, robotics and data become components of national power, countries will increasingly seek to secure their own technological ecosystems.
The consequences will be felt across the global economy. Investment will increasingly follow security considerations. Supply chains will become more diversified. Production may become more expensive. Technology trade will become increasingly strategic. And countries capable of building their own industrial and technological ecosystems will gain greater bargaining power.
Elon Musk may be only one name in this transformation. The larger story is that technology is no longer merely changing how the world works. It is beginning to change how the global economy itself is structured.
