The paper examines the economic and institutional determinants of the defense industry in the transformed security environment, emphasizing the sector’s importance for national defense. It assesses the implementation of the European Union (EU) Defense Industry Program in the wake of Russia’s invasion of Ukraine, focusing on implementation challenges, the role of multinational firms, and issues surrounding dual-use technologies. The research question asks which economic determinants influence program implementation and contribute to the EU’s economic and political security. The Program’s establishment within the EU’s first defense industry strategy marks a pivotal milestone for enhancing preparedness and the competitiveness of Europe’s defense technology and industrial base. Methodologically, the study combines qualitative and quantitative approaches.