The arms industry is a global industry and business which manufactures and sells weapons and military technology and equipment. Arms producing companies, also referred to as Defence companies or military industry, produce arms mainly for the armed forces of states. Products include guns, ammunition, missiles, military aircraft, military vehicles, ships, electronic Systems, and more. The arms industry also conducts significant research and development.

It is estimated that yearly, over 1 trillion dollars are spent on military expenditures worldwide (2% of World GDP). ^[1] Part of this goes to the procurement of military hardware and services from the military industry. The combined arms sales of the top 100 largest arms producing companies amounted to an estimated $315 billion in 2006. ^[2] In 2004 over $30 billion were spent in the international arms trade (a figure that excludes domestic sales of arms).^[3] Many industrialized countries have a domestic arms industry to supply their own military forces. Some countries also have a substantial legal or illegal domestic trade in weapons for use by its citizens. The illegal trade in small arms is prevalent in many countries and regions affected by political instability.

Contracts to supply a given country's military are awarded by the government, making arms contracts of substantial political importance. The link between politics and the arms trade can result in the development of what US President Dwight D. Eisenhower described as a military-industrial complex, where the armed forces, commerce, and politics become closely linked. Various corporations, some publicly held, others private, bid for these contracts, which are often worth many billions of dollars. Sometimes, such as the contract for the new Joint Strike Fighter, a competitive tendering process takes place, where the decision is made on the merits of the design submitted by the companies involved. Other times, no bidding or competition takes place.

In the Cold War Era, arms exports were used by both the Soviet Union and the United States to influence their standings in other countries, particularly Third World Countries. Since the fall of the Soviet Union, global arms exports initially fell slightly, but have since grown again to cold war levels.^[4] The United States is the overall top supplier of weapons. The United States is also the top supplier of weapons to the developing world, accounting for around 36% of worldwide weapons sales, followed by Russia, Britain, Germany and China.^[5][6]

The Control Arms Campaign, founded by Amnesty International, Oxfam, and the International Action Network on Small Arms, estimates that there are over 600 million items of small arms in circulation, and that over 1135 companies based in more than 98 different countries manufacture small arms as well as their various components and ammunition. According to Oxfam, an estimated 500,000 individuals die in small arms-conflicts every year, approximately one death per minute.^[7]

Sectors

The AK series of weapons have been produced in greater numbers than any other assault rifle and have been used in conflicts all over the world.

Land-based weapons

This category includes everything from light arms to heavy artillery, and the majority of producers are small. Many are located in Third World countries. International trade in handguns, machine guns, tanks, armored personal carriers and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many legitimately produced weapons fall into the hands of rebel forces, terrorists, or regimes under sanctions. ^[8]

Aerospace systems

Encompassing military aircraft (both land-based and naval aviation), conventional missiles, and military satellites, this is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the West, with the United States easily in first place. Prominent aerospace firms include Dassault Aviation, EADS,Finmeccanica, Thales Group, Lockheed Martin, Boeing, and Britain's BAE Systems. There are also several multinational consortia mostly involved in the manufacturing of fighter jets, such as the Eurofighter. The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter. ^[8]

Naval systems

All of the world's major powers maintain substantial maritime forces to provide a forward presence and enhance overall mobility, with the largest nations possessing aircraft carriers, nuclear submarines and advanced anti-air defense systems. The vast majority of military ships are conventionally powered, but some are nuclear-powered. There is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments. ^[8]

World's largest defence budgets

This is a list of the fifteen countries with the highest defence budgets for the year 2006. The information is from the Stockholm International Peace Research Institute, ^[9] Total World spending amounted to $ 1,158 billion USD in 2006, with nearly half of the total amount spent by the United States.

Military expenditure in market exchange rate dollar terms, 2006

Rank		Country	Spending ($b.)	%GDP[3]
-		World Total	1,158[4]	2.41
1		United States	985.7	12.99
2		United Kingdom	59.2	2.49
3		France	53.1	2.38
4		People's Republic of China	49.5[1]	1.88
5		Japan	43.7	1.00
6		Germany	37.0	1.28
7		Russia	34.7[1]	3.54
8		Italy	33.9	1.61
9		Saudi Arabia	29.0[2]	8.32
10		India	23.9	2.69
11		South Korea	21.9	2.47
12		Canada	14.6	1.10
13		Australia	13.8	1.83
14		Brazil	13.4	1.26
15		Spain	12.3	1.00

1. Data for China and Russia are estimates, their expenditures are not well known.
2. Data for Saudi Arabia include expenditure for public order and safety and might be slight overestimates.
3. In the percentage spending per GDP, the GDP list (2006) of the International Monetary Fund was taken.
4. One quarter of the world total is illicit and/or black market trade.

World's largest arms exporters

The unit in this table are so-called trend indicater values expressed in millions of dollars, US.. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid.

Supplier	2000	2001	2002	2003	2004	2005	2006	2007
USA	7505	5801	4984	5581	6616	7026	7821	7454
Russia	4190	5631	5458	5355	6400	5576	6463	4588
Germany	1622	825	910	1707	1017	1879	2891	3395
France	1033	1235	1342	1313	2267	1688	1586	2690
Netherlands	259	192	243	342	218	611	1575	1355
Ukraine	280	649	440[10]	530[10]	600[11]	700	1000[12]	1200[12]
UK	1356	1116	772	624	1143	871	978	1151
Italy	192	224	407	321	216	787	860	562
Sweden	308	850	125	468	287	536	472	529
China	228	498	544	553	271	223	564	413
Canada	83	129	182	279	305	193	227	355
Spain	46	7	120	158	73	116	803	343
Israel	321	298	365	309	533	244	258	238
Switzerland	104	120	109	139	201	166	144	211

The information is from the Stockholm International Peace Research Institute or from the national defence commissions where available and is updated at least once a year.

Next to SIPRI there are several other sources that provide data on international transfers of arms. These include national reports by national governments about arms exports, the UN register on conventional arms and an annual publication by the US US Congressional Research Service that includes data on arms exports to developing countries as compiled by US intelligence agencies. A list of such sources can be found at the SIPRI website. [2] Due to the different methodologies and definitions used different sources often provide significantly different data. For example, according to Statistisk sentralbyrå (Norway state statistics), Norway exports a greater value (in USD) of arms than many of the nations listed above. Some of the differences are possibly due to deliberate over or under reporting by some of the sources. Governments may claim high arms exports as part of their role in marketing efforts of their national arms industry or they may claim low arms exports in order to be perceived as a responsible international actor.

List of major weapon manufacturers

For a complete list, see: List of modern armament manufacturers

Control and international treaty

The European Union Council stated to the U.N. General Assembly:

We are committed to upholding, implementing and further strengthening the multilateral disarmament and non-proliferation framework in the fight against threats which are tending to escape the control of national sovereignty, the challenges deriving from destabilising accumulation and spread of small arms and light weapons, from illicit or irresponsible arms trade, and from the proliferation of weapons of mass destruction, which are creating new and growing hot-spots of international tension. In this regard, the EU welcomes the growing support in all parts of the world for an International Arms Trade Treaty and is firmly committed to this process.^[13]

Please help improve this section by expanding it. Further information might be found on the talk page. (May 2008)

Institutes participating in weapon research and warfare simulation

• Netherlands Organisation for Applied Scientific Research [3]
• Bolt, Beranek and Newman
• QinetiQ
• World Security Institute

Ethical dimension

For many people, arms exports may pose an ethical challenge, as they may see supplying the weapons for a conflict as morally akin to becoming involved with negligible personal, national or corporate risk. Essentially, they view the arms industry as a means of profiting from war and death when failure to supply arms could lead to an early disengagement.

On the other hand, exporting arms to groups (or nations) with "laudable" goals- a rebel group overthrowing a fascist regime, say- can be an invaluable equalizer in the conflict. And there is no shortage of parties to a conflict- the Hutus during the Rwandan genocide, for example- that had little trouble making use of such archaic, inexpensive technology as the machete, to attack and terrorize the Tutsi community.

Of course- and this is endemic of nearly every debate over arms trade- the terminology used and the people it refers to can be frustratingly fluid. As years pass, governments decide on new "interests" and circumstances change accordingly. "Freedom fighters" become "insurgents". "Terrorists" become "invaluable allies", and "religious zealots" morph into "agents of stability". Entire nations, to use the parlance of the early 21st century, can go from the "Coalition of the Willing" to the "Axis of Evil" in very little time, and every change affects policy and the distribution of arms in the world.

See also

• Small arms proliferation
• European Union arms embargo on China
• List of National Defense Industries
• Private military contractors
• Campaign Against Arms Trade
• Canadian Arms trade
• List of countries by military expenditures
• Permanent arms economy
• Military funding of science
• Military Keynesianism
• Peace dividend
• Guns versus butter theory
• Al Yamamah arms deal
• Arms control
• Black Rose

References

External links

• Defense Sector Investment Benchmark - SPADE Defense Index (AMEX: DXS)
• World Security Institute's Center for Defense Information
• Campaign Against Arms Trade (UK)
• SIPRI arms industry reports and database
• SIPRI list of Top 100 arms-producing companies
• The Guardian's arms trade report
• List of participators of the Defense System and Equipment international conference in London, 2003
• FAS's Arms Sales Monitoring Project
• UN Department for Disarmament Affairs
• ControlArms.org
• Defense Industrial Base Blog
• Amnesty International: Arms Trade Treaty
• The British Library - Defence Industry Guide (sources of information)
• Z. Yihdego, Arms Trade and International Law, Hart: OXford, 2007