1. History

Painting shells in a shell filling factory during World War I. https://handwiki.org/wiki/index.php?curid=1993402

During the early modern period, France, United Kingdom, Netherlands and some states in Germany became self-sufficient in arms production, with diffusion and migration of skilled workers to more peripheral countries such as Portugal and Russia.

The modern arms industry emerged in the second half of the nineteenth century as a product of the creation and expansion of the first large military-industrial companies. As smaller countries (and even newly industrializing countries like Russia and Japan) could no longer produce cutting-edge military equipment with their indigenous resources and capacity, they increasingly began to contract the manufacture of military equipment, such as battleships, artillery pieces and rifles to foreign firms.

In 1854, the British government awarded a contract to the Elswick Ordnance Company of industrialist William Armstrong for the supply of his latest breech loading rifled artillery pieces. This galvanised the private sector into weapons production, with the surplus being increasingly exported to foreign countries. Armstrong became one of the first international arms dealers, selling his weapon systems to governments across the world from Brazil to Japan.^[1] In 1884, he opened a shipyard at Elswick to specialise in warship production—at the time, it was the only factory in the world that could build a battleship and arm it completely.^[2] The factory produced warships for many navies, including the Imperial Japanese Navy. Several Armstrong cruisers played an important role in defeating the Russian fleet at the Battle of Tsushima in 1905.

In the American Civil War in 1861 the north had a distinct advantage over the south as it relied on using the breech-loading rifle against the muskets of the south. This began the transition to industrially produced mechanised weapons such as the Gatling gun.^[3]

This industrial innovation in the defence industry was adopted by Prussia in 1866 & 1870-71 in its defeat of Austria and France respectively. By this time the machine gun had begun entering into the militaries. The first example of its effectiveness was in 1899 during the Boer War and in 1905 during the Russo-Japanese War. However, Germany were leaders in innovation of weapons and used this innovation nearly defeating the allies in World War I.

In 1885, France decided to capitalize on this increasingly lucrative form of trade and repealed its ban on weapon exports. The regulatory framework for the period up to the First World War was characterized by a laissez-faire policy that placed little obstruction in the way of weapons exports. Due to the carnage of World War I, arms traders began to be regarded with odium as "merchants of death" and were accused of having instigated and perpetuated the war in order to maximise their profits from arms sales. An inquiry into these allegations in Britain failed to find evidence to support them. However, the sea change in attitude about war more generally meant that governments began to control and regulate the trade themselves.

Stacks of shells in the shell filling factory at Chilwell during World War I. https://handwiki.org/wiki/index.php?curid=1592269

The volume of the arms trade greatly increased during the 20th century, and it began to be used as a political tool, especially during the Cold War where the United States and the USSR supplied weapons to their proxies across the world, particularly third world countries (see Nixon Doctrine).^[4]

2. Sectors

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

2.1. Land-Based Weapon

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 personnel carriers, and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many weapons fall into the hands of organized crime, rebel forces, terrorists, or regimes under sanctions.^[5]

Small arms

The Control Arms Campaign, founded by Amnesty International, Oxfam, and the International Action Network on Small Arms, estimated in 2003 that there are over 639 million small arms in circulation, and that over 1,135 companies based in more than 98 different countries manufacture small arms as well as their various components and ammunition.^[6]

2.2. Aerospace Systems

A T-45 Goshawk on the assembly line at McDonnell Douglas. https://handwiki.org/wiki/index.php?curid=1559603

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 western world and Russia, with the United States easily in first place. Prominent aerospace firms include Rolls Royce, BAE, Dassault Aviation, Sukhoi, Mikoyan, EADS, Leonardo, Thales Group, Lockheed Martin, Northrop Grumman and Boeing. 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.^[5]

2.3. Naval systems

Some of the world's great powers maintain substantial naval forces to provide a global presence, 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.^[5]

3. Cybersecurity Industry

The cybersecurity industry is becoming the most important defence industry as cyber attacks are being deemed as one of the greatest risk to defence in the next ten years as cited by the NATO review in 2013.^[7] Therefore, high levels of investment has been placed in the cybersecurity industry to produce new software to protect the ever-growing transition to digitally run hardware. For the military industry it is vital that protections are used for systems used for reconnaissance, surveillance and intelligence gathering. However, to protect the cyber world from attacks there are advanced cyber protection strategies used such as content, cloud and wireless security. These can be intertwined to form several secure layers.

Nevertheless, cyber attacks and cyber attackers have become more advanced in their field using techniques such as Dynamic Trojan Horse Network (DTHN) Internet Worm, Zero-Day Attack, and Stealth Bot. As a result, the cybersecurity industry has had to improve the defence technologies to remove any vulnerability to cyber attacks using systems such as the Security of Information (SIM), Next-Generation Firewalls (NGFWs) and DDoS techniques.

As the threat to computers grows, the demand for cyber protection will rise, resulting in the growth of the cybersecurity industry. It is expected that the industry will be dominated by the defence and homeland security agencies that will make up 40% of the industry.^[8]

4. International Arms Transfers

According to research institute, SIPRI, the volume of international transfers of major weapons in 2010–14 was 16 per cent higher than in 2005–2009. The five biggest exporters in 2010–14 were the United States, the United Kingdom, Russia, China and France, and the five biggest importers were India, Saudi Arabia, China, the United Arab Emirates (UAE) and Pakistan. The flow of arms to Africa, the Americas, Asia and Oceania, and the Middle East increased significantly between 2005–2009 and 2010–14, while there was a notable decrease in the flow to Europe.^[9]

SIPRI has identified 60 countries as exporters of major weapons in 2010–14. The top 5 exporters during the period were responsible for almost 74 per cent of all arms exports. The composition of the five largest exporters of arms changed between 2005–2009 and 2010–14: while the United States and Russia remained by far the largest exporters, China narrowly, but notably, replaced Germany as the third largest exporter as Germany slid down to 6th place. The top 5 exported 14 per cent more arms in 2010–14 than the top 5 in 2005–2009.^[9]

In 2010–14, 153 countries (about three-quarters of all countries) imported major weapons. The top 5 recipients accounted for 33 per cent of the total arms imports during the period (see table 2). India, China and the UAE were among the top 5 importers in both 2005–2009 and 2010–14. Asia and Oceania accounted for nearly half of imports in 2010–14, followed by the Middle East, Europe, the Americas and Africa (see figure 3). SIPRI also identified seven groups of rebel forces as importers of major weapons in 2010–14, but none of them accounted for more than 0.02 per cent of total deliveries.^[9]

5. World's Largest Arms Exporters

Units are in Trend Indicator Values expressed as millions of U.S. dollars at 1990s prices. These numbers may not represent real financial flows as prices for the underlying arms can be as low as zero in the case of military aid. The following are estimates from Stockholm International Peace Research Institute.^[10]

2012–2016 Rank	Supplier	Arms Exp
1	United States	47,169
2	Russia	33,186
3	China	9,132
4	France	8,564
5	Germany	7,946
6	United Kingdom	6,586
7	Spain	3,958
8	Italy	3,823
9	Ukraine	3,677
10	Israel	3,233

Please note that rankings for exporters below a billion dollars are less meaningful, as they can be swayed by single contracts. A much more accurate picture of export volume, free from yearly fluctuations, is presented by 5-year moving averages.

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 U.S. Congressional Research Service that includes data on arms exports to developing countries as compiled by U.S. intelligence agencies. A list of such sources can be found at the SIPRI website.^[11] Due to the different methodologies and definitions used different sources often provide significantly different data.

World’s biggest postwar arms exporter

SIPRI uses the "trend-indicator values" (TIV). These are based on the known unit production costs of weapons and represent the transfer of military resources rather than the financial value of the transfer.^[12]

1950–2017 Rank	Supplier	Arms Exp (in billion TIV)
1	United States	673,010
2	Russia	588,150
3	United Kingdom	140,380
4	France	120,700
5	Germany	85,980
6	China	53,090
7	Italy	32,270
8	Czech Republic	31,250
9	Netherlands	24,010
10	Israel	16,790

6. World's Largest Arms Importers

Units are in Trend Indicator Values expressed as millions of U.S. dollars at 1990s prices. These numbers may not represent real financial flows as prices for the underlying arms can be as low as zero in the case of military aid.^[10]

2012–2016 rank	Recipient	Arms imp
1	India	18,239
2	Saudi Arabia	11,689
3	United Arab Emirates	6,593
4	China	6,381
5	Australia	5,636
5	Algeria	5,312
7	Turkey	4,721
8	Iraq	4,598
9	Pakistan	4,494
10	Vietnam	4,273

Please note that arms import rankings fluctuate heavily as countries enter and exit wars. Export data tend to be less volatile as exporters tend to be more technologically advanced and have stable production flows. 5-year moving averages present a much more accurate picture of import volume, free from yearly fluctuations.

7. List of Major Weapon Manufacturers

This is a list of the world's largest arms manufacturers and other military service companies who profit the most from the War economy, their origin is shown as well. The information is based on a list published by the Stockholm International Peace Research Institute for 2015.^{[13][14][15][16][17]} The list provided by the SIPRI excludes companies based in China.

Rank	Company	Country	Arms sales (US$ m.)	Total sales (US$ m.)	Arms sales as a % of total sales	Total profit (US$ m.)	Total employment
1	Lockheed Martin	United States	36,440	46,132	79	3,605	126,000
2	Boeing	United States	27,960	96,114	29	5,176	161,400
3	BAE Systems	United Kingdom	25,510	27,355	93	1,456	82,500
4	Raytheon	United States	21,780	23,247	94	2,067	61,000
5	Northrop Grumman	United States	20,060	19,683	86	1,990	65,000
6	General Dynamics	United States	19,240	31,469	61	2,965	99,900
7	Airbus	European Union	12,860	71,476	18	2,992	136,570
8	United Technologies Corporation	United States	9,500	61,047	16	4,356	197,200
9	Leonardo S.p.A.	Italy	9,300	14,412	65	584	47,160
10	L3 Technologies	United States	8,770	10,466	84	282	38,000

8. Arms Control

Arms control refers to international restrictions upon the development, production, stockpiling, proliferation and usage of small arms, conventional weapons, and weapons of mass destruction.^[18] It is typically exercised through the use of diplomacy, which seeks to persuade governments to accept such limitations through agreements and treaties, although it may also be forced upon non-consenting governments.

8.1. Notable International Arms Control Treaties

• Geneva Protocol on chemical and biological weapons, 1925
• Outer Space Treaty, signed and entered into force 1967
• Biological Weapons Convention, signed 1972, entered into force 1975
• Missile Technology Control Regime (MTCR), 1987
• Chemical Weapons Convention, signed 1993, entered into force 1997
• Ottawa Treaty on anti-personnel land mines, signed 1997, entered into force 1999
• New START Treaty, signed by Russia and the United States in April 2010, entered into force in February 2011
• Arms Trade Treaty, concluded in 2013, entered into force on 24 December 2014.^[19]

The European Council stated to the United Nations General Assembly:

9. Private Military Companies (PMCs)

In addition to companies specializing in the production of weapons, other defense contractors are employed by governments, NGOs, and wealthy corporations or individuals. They often provide services such as logistical support, static defense, personal security details, and protection of equipment and material. Some notable current PMCs include TripleCanopy, DynCorp, and Academi (formerly Blackwater Worldwide).

The content is sourced from: https://handwiki.org/wiki/Engineering:Arms_industry