Nowadays, more and more countries have progressively set their defense industries toward exports. A number of economic, strategic, and operational factors give rise to this trend, which underscores the importance of military exports in view of maintaining a viable defense industrial base. This article discusses reasons for such a phenomenon, as well as multifaceted forms of benefits linked to an export-oriented defense approach.

Transition to export-oriented framing of the defense industries is also well-documented in today’s literature where many studies examine why such a transition could be economically, strategically, and operationally feasible. Indeed, studies point out that countries, especially in the post–Cold War period, have been restructuring their defense sectors to keep themselves competitive and in pace with the shrinking national budgets for defense. For instance, it has increasingly looked at exporting as a source of stability in revenues for both employment and economies of scale to support defense companies.

Economic Incentives for Defense Exports

One of the very powerful points of attraction for countries towards exports of defense is the potentiality of great economic benefit. With the defense budgets lowering at an alarming rate -especially within the United States, where the DoD is forecasted to throttle its spending- defenses manufacturers must seek other sources of income. Straight and Peterson (1993) list the strategies’ which U.S. defense firms use to compensate for their country’s losses in terms of national income because of these military export sales- like, the multimillion-dollar sale of their F-16 jet fighters to Taiwan amounting to $5.8bn, or the Sales of F-15s to Saudi Arabia reaching an amount value of $9 billion. The ability to export, however has implications on a defense firm’s operational stability and security of jobs.

Additionally, defense exports can generate economies of scale, whereby the unit production costs are decreased by the producers. Крицкая (2023) states that the possibility to raise the output volume of merchandise through the export path enables the spreading of fixed costs across a wider output, enhancing cost efficiency. It is this cost decrease that is specifically significant to countries like South Korea, which try to stay competitive for their prices on the global arms market.

Strategic Considerations in Arms Exports

Apart from the economic reasons, strategic considerations also play an important role in choosing an export-oriented defense industry. The post-Cold War security environment has urged countries to re-examine their policies about defense trade as they understand what true interoperability with their allies implies. According to Wilson (2023), the export of arms is so important because U.S. military forces will be able to effectively interact with the military forces of its friends, thus developing strategic partnerships.

According to Golde and Tishler (2023), the international arms market is very competitive, and hence its dynamics requires that countries increase their export capacity. The consolidation of the defense companies in the United States and Europe leaded the few major defense corporations to start dominating the market. This is a condition that can only be maintained by putting more emphasis on exports. Since obtaining the contract would attract big international sales, the competition calls for innovation and improvement in the countries’ defense products.

Much of the literature to date focuses on how arms exports enable the international partnerships and interoperability with armed forces of allies in service of competitive positioning within a very competitive global market. Countries such as Turkey can radically change from client states to competitive actors in global arms markets by innovating and increasing their export potential in order to enhance geopolitical influence along with economic stability.

Operational Benefits of Export-Focused Defense Industries

The contexts of international arms trade enable a country to build its technological capacities through cooperation and liaised R&D efforts. An export-oriented defense industry can, in return, offer substantial operational benefits. For example, the Spanish defense industry has greatly benefited from international collaboration with regard to technological knowhow development and export-oriented growth (Fonfría & Duch-Brown, 2023). Such collaboratives ensue not only in the incentive to build up advanced military technologies but also in a deduction in R&D spending by sharing out resources.

Moreover, such exportation bolsters the influence of one state over its allies since importing states depend on the exporting state with respect to defense support and training. Relationships like this breed more profound forms of diplomatic relations and contribute a great deal to regional stability (Крицкая, 2023). The strategic consequences of arms exports go far beyond the mere economic transaction and touch upon broader foreign policy goals and increased national security.

In other words, the international arms trade operationally develops technologies and consolidates reduction of costs in R&D by forming partnerships through business with foreign partners. This consolidates not only national but also regional security through deep diplomatic relations.

Market Dynamics and Global Competition

The global arms market is very competitive since many countries are seeking to capture the market. US arms exports stands at a rough estimated $18 billion annually in military merchandise. Most of this has been through new production, as Straight & Peterson (1993) puts it. In order to replace the projected losses in domestic business, US manufacturers will have to export as much as two or three-fold over the present level. This need to increase exports assumes more importance in the face of most other countries who are desperately trying to notch up their military exports in the highly competitive world market. As they stated regarding what determines the quantum of military export from the United States: “countries facing economic recession are more likely to reduce their defense budget, which negatively influences demand for military export”.

Conclusion

The export-oriented defense industry is multicausal, with economic, strategic, and operational determinants. As countries realize the peculiarities of the international arms market, earning income through military exports turns out to be increasingly important for sustaining their defense-industrial structures. Indeed, nurturing international cooperation and promoting interoperability with other states may enable them to take advantage of the use of their defense sectors for wider geopolitical purposes. The policy direction to defense export therefore brings in not only strengthening of national security but also economic strength in the defense industry.

References

Straight, R. L., & Peterson, D. J. S. (1993). Role of military exports in maintaining the defense industrial base: An annex to adjusting to the drawdown report of the Defense Conversion Commission. Washington, DC: Defense Conversion Commission.

Fonfría, A., & Duch-Brown, N. (2023). Explaining export performance in the Spanish defense industry.

Wilson, I. (2023). Providing for the common defense? The effects of recent arms trade reform on the Army profession.

Golde, S., & Tishler, A. (2023). Security needs, arms exports, and the structure of the defense industry: Determining the security level of countries.

Крицкая, К. С. (2023). South Korean military export: Current trends and prospects.

Paik, W. (2024). The Korean defense industry enters the European security theater: An analysis of Korea-Poland arms deals.