In the eighties the Spanish Government launched an ambitious policy aimed at restructuring the militaryindustrial base. Central to it was a remarkable defence R&D effort. Government sources often argue for the military industry as an engine for the modernization of the Spanish industrial base. The object of this dissertation is to reach conclusions on the potential role of Spanish military production as a technological engine for the Spanish economy. This is done through an analysis of the structure of the Spanish military-related industry and its linkages with the rest of the economy. Up till the present most research on the role of military production has adopted too narrow a view focusing mainly on arms producers. This work presents an alternative way of conceptually focusing research of this nature. It expands the ambit of the study to examine all firms involved in military production from components to systems producers, no matter the degree of their involvement. In this way, we find that the strongest linkages with the rest of the industrial and research activities appear in the more "mature" sectors of the economy (mainly in the metal sector) and among producers of components and sub-systems. Consequently, more channels for technological diffusion from military to civilian production are found in these sectors. Yet, these areas have been found to be overlooked by and large by the present defence industrial policy which targets systems assemblers and the electronics, aerospace and software producers as the main recipients of research contracts and incentives. These results further question the conventional usage of implicitly treating defence production and technology as homogenous entities. Through our broad conceptual approach we obtain new insights into the linkages between military-rel~ted and civilian activities. The study reveals that the potent1al effects of military research and production on the rest of the economy depend on the specific sect~rs and,stages,of production targeted by the defence 1ndustr1al policy.