El marcado crecimiento de la industria armament\u00edstica de Corea del Sur (conocida localmente como\u00a0K-Bangsan<\/i>\u00a0) se debe en gran medida a la adopci\u00f3n por sucesivos gobiernos nacionales de pol\u00edticas industriales armament\u00edsticas intervencionistas, junto con el \u00e9xito de los productores surcoreanos a la hora de aprovechar oportunidades en los mercados extranjeros, en particular desde 2022. Sin embargo, el alto grado de participaci\u00f3n estatal (e inversi\u00f3n) en la industria armament\u00edstica de Corea del Sur no est\u00e1 exento de riesgos. Este documento analiza la combinaci\u00f3n de factores internos y circunstancias internacionales que han permitido el r\u00e1pido crecimiento de la industria armament\u00edstica de Corea del Sur y los desaf\u00edos que se avecinan.<\/p>\n
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South Korea has emerged as one of the world\u2019s fastest-growing arms producers and, more recently, arms exporters. Four South Korean companies appear in the\u00a0<\/span>SIPRI Top 100<\/span><\/a>\u00a0list of arms producers with the biggest arms sales revenues in 2024: the Hanwha Group, LIG Nex1, Hyundai Rotem and Korea Aerospace Industries (KAI), whose combined arms revenues increased by 30 per cent in 2023\u201324.<\/span><\/p>\n South Korean producers like these have become familiar names in European and global arms procurement discussions. According to\u00a0<\/span>SIPRI\u2019s arms transfers data<\/span><\/a>, South Korean arms export volumes more than doubled between 2010\u201314 and 2020\u201324.<\/span><\/p>\n The marked growth of the South Korean arms industry (known locally as\u00a0<\/span>K-Bangsan<\/span><\/em>) owes much to successive national governments embracing an interventionist arms industrial policy, along with the success of South Korean producers in leveraging opportunities in overseas markets, particularly since 2022. However, the high degree of state involvement\u2014and investment\u2014in South Korea\u2019s arms industry is not without risks.<\/span><\/p>\n This backgrounder explores the combination of domestic drivers and international circumstances that have enabled the South Korean arms industry\u2019s rapid growth, and the challenges that lie ahead.<\/span><\/p>\n A state-led development model<\/span><\/strong><\/p>\n While a\u00a0<\/span>1953 armistice<\/span><\/a>\u00a0halted combat between the two Koreas, they have remained technically in a state of war ever since. This unresolved security situation, defined by a persistent threat from North Korea, became the fundamental driver of South Korea\u2019s post-war arms industrial policy.<\/span><\/p>\n For the first two decades after the armistice, South Korea was fully dependent on military support from the United States to meet its defence needs. The risks of this dependence were exposed when the USA reduced its troop presence on the Korean Peninsula in the early 1970s under the\u00a0<\/span>Nixon Doctrine<\/span><\/a>. In response to this apparent sign that the USA was becoming a less reliable security guarantor, President Park Chung-hee initiated a campaign to achieve self-reliant national defence (<\/span>jaju gukbang<\/span><\/em>) which was linked to a rapid industrialization policy, the\u00a0<\/span>Heavy and Chemical Industry drive<\/span><\/a>.\u00a0<\/span><\/p>\n This drive included the first steps towards military import substitution, focused on licensed production and simple assembly of items such as ammunition and basic infantry weapons. While the USA increased military assistance to South Korea to compensate for the troop reductions, successive South Korean administrations have continued to invest heavily in building up the indigenous arms industrial base.<\/span><\/p>\n The evolution of South Korea’s arms industry was typical of the \u2018developmental state\u2019 industrialization model, characterized by heavily state-led planning and intervention, which was also adopted by several other East Asian countries in the wake of World War II. At first, South Korean arms producers focused on manufacturing US-designed weapons under licence, including small arms, anti-tank rockets and artillery. Licensed production of US-designed weapons facilitated technology transfer and helped the arms industry develop. By leveraging the growing civilian industrial base in South Korea, the government and companies were able to absorb manufacturing processes, upgrade knowledge and facilities, and thus gradually\u00a0<\/span>build up<\/span><\/a>\u00a0the South Korean arms industry.<\/span><\/p>\n A clear division of roles emerged. The government was not only the main customer but also took the lead in research, development and testing. Arms companies\u2014chiefly large, family-run conglomerates (known as\u00a0<\/span>chaebols<\/span><\/em>) producing both civilian and military goods\u2014manufactured designs provided mostly by the Agency for Defense Development (ADD), as well as carrying out maintenance, repair and overhaul. The ADD falls under the Defense Acquisition Program Administration (DAPA), which oversees and coordinates the entire arms procurement and acquisition process, including the activities of private manufacturers.<\/span><\/p>\n This arrangement created a tightly integrated, state-centred development model in which government-affiliated agencies became responsible for the riskiest and most capital-intensive stages of arms development and production, allowing private companies to focus on prototype development and mass production capacity. Although South Korean firms have begun expanding their own R&D efforts in recent years, the legacy of this model is still large.<\/span><\/p>\n South Korea\u2019s arms procurement spending and arms industry revenues have both grown substantially over the past decade, although their trajectories have not always moved in parallel. For example, procurement spending rose steadily between 2015 and 2021, while the arms revenues of the five biggest South Korean arms producers fluctuated, before rising sharply from 2022 while procurement spending remained level. In 2024 South Korea\u2019s military spending was US$47.6 billion, 30 per cent more than in 2015. Its military procurement spending increased by 33 per cent in the same period to reach $13.2 billion, under a <\/span>large-scale programme<\/span><\/a>\u00a0aimed at enhancing air defence and pre-emptive strike capacities against North Korean ballistic and nuclear missiles. In the same period, the arms revenues of the five biggest arms producers grew by more than 92\u00a0per cent, reaching $15.2 billion, due to sustained domestic demand and a surge in export deals, as well as various mergers and acquisitions.<\/span><\/p>\n K-Bangsan\u2019s growing exports\u00a0<\/span><\/strong><\/p>\n While domestic procurement still accounts for most of the arms revenues of South Korean producers, revenue growth since 2022 has principally been driven by arms exports. The surge in exports has been fuelled by several European states seeking to replace materiel sent to Ukraine as military aid and to modernize their arsenals in response to the growing perceived threat from Russia. With European arms producers struggling to expand output quickly, South Korean suppliers benefited from the urgent new demand by offering short turnaround times, competitive pricing and generous technology transfer terms that traditional suppliers in the region were unable to match in the short term. As a result, for the first time, Hanwha Group\u2014South Korea\u2019s largest arms producer\u2014earned more from exports than from domestic sales in 2024.<\/span><\/p>\n In 2020\u201324 South Korea ranked as the world\u2019s 10th largest exporter of major arms, accounting for a 2.2 per cent share of global exports, up from 0.9 per cent a decade earlier. The intervening period saw significant changes in both the range of systems exported and the number of recipient states. Until 2015\u201319 South Korea exported mainly artillery systems, ships and aircraft. In 2020\u201324 the mix of exports expanded to include armoured vehicles, missiles and air defence systems. Exports of armoured vehicles, artillery systems and missiles in 2020\u201324 aligned with European procurement needs following Russia\u2019s full-scale invasion of Ukraine, while the air defence systems were part of a large order by the United Arab Emirates.<\/span><\/p>\n In 2010\u201314 more than 90 per cent of South Korea\u2019s major arms exports went to either T\u00fcrkiye or Indonesia, while in 2020\u201324 the list of recipients included 23 states including several in Europe, Africa and Latin America. More than half of South Korea\u2019s major arms exports in 2020\u201324 went to Europe, with Poland alone accounting for 46 per cent.<\/span><\/p>\n The South Korean arms industry has now become an important component of national economic and foreign policy. The government promotes arms exports as both an industrial priority to reduce the unit costs through economies of scale in domestic production, and a foreign policy strategy to deepen ties with partners in Europe, South East Asia and the Middle East. Recent agreements include a defence cooperation memorandum of understanding (MOU) with\u00a0<\/span>Saudi Arabia<\/span><\/a>\u00a0and a\u00a0<\/span>Security and Defence Partnership<\/span><\/a>\u00a0with the European Union (EU) in 2024; an MOU on defence with\u00a0<\/span>T\u00fcrkiye<\/span><\/a>\u00a0signed last month; and earlier cooperative frameworks with\u00a0<\/span>India<\/span><\/a>\u00a0and\u00a0<\/span>Indonesia<\/span><\/a>. These reflect South Korea\u2019s broader effort to diversify its defence partnerships.<\/span><\/p>\n A range of factors lie behind South Korean producers\u2019 competitiveness in the global arms market. Two of these can be linked directly to the long-standing arms industrial model: short turnaround times and flexibility.<\/span><\/p>\n A combination of the long-standing division of labour in the South Korean arms industry and\u00a0<\/span>reliable demand<\/span><\/a>\u00a0from the national military have enabled producers to develop mass production capacity and\u00a0<\/span>localized supply chains<\/span><\/a>. Production lines are streamlined and cost-efficient, often highly automated and modular. For example, at Hanwha Aerospace\u2019s new \u2018smart factory\u2019 in Changwon, South Korea, around 70\u201380 per cent of welding work on the ground weapon systems built there is\u00a0<\/span>reportedly<\/span><\/a>\u00a0done by automated systems.\u00a0<\/span><\/p>\n Production lines can also be quickly adapted to produce new designs to meet a customer\u2019s needs and then manufacture at scale. As an illustration, an initial batch of 10 K2 main battle tanks and 24 K9 self-propelled howitzers was delivered to Poland just three months after the contract was signed, and bulk deliveries numbering in the hundreds are planned. This contrasts with industries in many other countries that\u00a0<\/span>needed time<\/span><\/a>\u00a0to ramp up production after 2022, experiencing supply chain disruptions and restarting or expanding production lines only after new contracts were signed.<\/span><\/p>\n Furthermore, South Korean arms firms have utilized established mechanisms such as localized production, joint ventures and offsets to build enduring strategic partnerships with foreign firms and customers. This approach has been effective in Poland, where South Korean producers have been well positioned to operate within the\u00a0<\/span>\u2018Polonization\u2019 policy<\/span><\/a>\u00a0aimed at modernizing Poland\u2019s arms forces and strengthening the domestic arms industrial base by involving local firms in the manufacture and delivery of imported weapon systems. For example, in 2023 Hyundai Rotem formed\u00a0<\/span>a consortium<\/span><\/a>\u00a0with Polska Grupa Zbrojeniowa (PGZ) for production of a Polonized version of the K2. Similarly, in September this year, Hanwha Aerospace and Poland\u2019s WB Group established a\u00a0<\/span>joint venture<\/span><\/a>\u00a0for localized production of CGR-080 guided missiles. This active, localization-oriented strategy helps to meet local industrial participation requirements and aligns with Europe\u2019s broader protectionist industrial policies.<\/span><\/p>\n South Korean firms have pursued similar approaches outside Europe. In Peru, Hyundai Rotem has constructed a $270 million assembly plant for K2 tanks and K808 armoured vehicles and secured\u00a0<\/span>exclusive rights\u00a0<\/span><\/a>to supply imported land systems to the country. Taken together, these initiatives reflect South Korea\u2019s strategy of coupling arms exports with industrial and technological cooperation, which has contributed to its growing role as a supplier in the global arms market.<\/span><\/p>\n South Korea\u2019s arms industrial policy has long had its critics. Despite the remarkable growth that the South Korean arms industry has achieved in recent years, its long-term sustainability remains uncertain.\u00a0<\/span><\/p>\n The South Korean case highlights the advantages and limitations of a strong state-directed model of rapid arms industrial development under conditions of insecurity. As states in Europe and elsewhere move to expand their own arms industrial bases, it is worth considering the structural, strategic and normative risks embedded in the South Korean approach.<\/span><\/p>\n Like the developmental state model more broadly, South Korea\u2019s approach to arms industry development has several structural vulnerabilities. One persistent issue is the high degree of dependence on the domestic market and state-led R&D. Although\u00a0<\/span>recent reforms<\/span><\/a>\u00a0have sought to shift away from this state-centred model, its legacy persists. The state\u2019s prominent role in R&D for military procurement weakens the incentive for private producers to build their own R&D capacity, except when related to production methods. This is a particular problem when it comes to developing next-generation, cutting-edge\u00a0<\/span>military technologies<\/span><\/a>\u00a0whose adoption by the Republic of Korea Armed Forces is uncertain. As global demand and technology priorities extend beyond immediate geopolitical concerns, this could leave South Korean producers at a disadvantage if they fail to build innovation capabilities. Similar challenges are likely to confront European efforts to rebuild arms production through EU- or state-backed initiatives, which risk reproducing the same tensions between short-term output goals and longer-term innovation capacity.<\/span><\/p>\n Another looming challenge is that South Korea may find it increasingly difficult to sell into international markets. South Korean producers face new regulatory and market challenges in Europe as the EU seeks to strengthen supply chains within the region. For example, the\u00a0<\/span>Security Action for Europe (SAFE) regulation<\/span><\/a>\u00a0adopted in May and the\u00a0<\/span>provisional agreement<\/span><\/a>\u00a0on the European Defence Industry Programme (EDIP) from November both restrict financial assistance for arms procurement where non-EU components account for over 35 per cent of the estimated value of the end product. Once European production capacity ramps up, South Korean firms may face additional barriers. Similar protectionist tendencies exist in the\u00a0<\/span>United States<\/span><\/a>, such as technologies requiring US International Traffic in Arms Regulations (ITAR) clearance, as well as in\u00a0<\/span>India<\/span><\/a>\u00a0and\u00a0<\/span>T\u00fcrkiye<\/span><\/a>, which could limit potential export growth in those key markets.<\/span><\/p>\n Finally, while technology transfer and localized production arrangements can help secure export contracts, they also come with strategic risks. When the partner state has an advanced industrial base, technology transfer and localized production arrangements can accelerate the development of indigenous weapon designs and production capacity, potentially making it a competitor in global markets. This dynamic is evident in the case of\u00a0<\/span>T\u00fcrkiye<\/span><\/a>, which is now looking to secure a larger share of arms exports, and T\u00fcrkiye\u2019s Altay main battle tank, developed with technology transferred from South Korea\u2019s K2 platform, could become a competitor to the K2.\u00a0<\/span><\/p>\n Balancing the short-term gains from securing contracts through generous industrial cooperation against the long-term risks of creating new competitors will remain a key challenge for the South Korean arms industry and raises broader questions about the sustainability of its current export strategy.<\/span><\/p>\nChallenges and risks on the horizon<\/span><\/h3>\n