Globalization of Arms Production And Hierarchical Market Economies: Explaining the Transformation of the South Korean Defense Industry

Abstract

The global arms industry has experienced a major transformation in the post-Cold War era, with production becoming increasingly transnational and larger in scale. While many scholars and policymakers predicted the widespread adoption of market-enhancing reforms aimed at increasing domestic competition and attracting FDI, globalization of arms production has not led to a convergence of national defense industries into a liberal- market model. Drawing on the varieties of capitalism (VoC) literature, recent scholarship has demonstrated how an interdependent web of economic institutions has shaped each country's response in varied ways. This paper builds on the VoC literature and argues that the hierarchical market economy (HME) as a distinct variety serves as a better model for understanding the trajectory of defense industries in many second-tier producers that do not fit the existing categories of VoC. We conduct an in-depth case study of South Korea's defense-industry reform initiated in 2008 and the subsequent threefold increase in its arms exports. We show that the trajectory of South Korea's defense-industry reform can be seen as the result of an HME's attempt to adapt to the globalization of arms production in ways that preserve its distinct comparative advantage. As the HME model has broad applicability for many countries in Asia and Latin America, our findings have important implications for future developments in the global arms industry.

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“…Studying the globalisation of arms production, C. Choi & S. Park (2023) note that this has not led to the convergence of the national defence industry to a liberal market model. The researchers conducted an in-depth study of South Korea's defence industry reform, which began in 2008, and the subsequent increase in arms exports (Choi & Park, 2023) and noted that the goal of South Korea's defence industry reform was to maintain its advantage among other countries.…”

Analysis of Ukraine’s external military-economic relations during the war with Russia

“…Studying the globalisation of arms production, C. Choi & S. Park (2023) note that this has not led to the convergence of the national defence industry to a liberal market model. The researchers conducted an in-depth study of South Korea's defence industry reform, which began in 2008, and the subsequent increase in arms exports (Choi & Park, 2023) and noted that the goal of South Korea's defence industry reform was to maintain its advantage among other countries.…”