Examining Driving Forces of Arms Production: Security Demand or Economic Needs—World’s Largest Defense Companies

Abstract

Arms production differs from that of general products because it involves both government and market factors. The needs of various actors vary; therefore, arms production is driven by internal security demands and external economic needs. This study identifies the complex factors behind arms production using fuzzy-set qualitative comparative analysis (fsQCA) to examine the configurations influencing arms production among the 77 largest defense companies. The results indicate that economic needs alone are neither necessary nor sufficient conditions for arms production. Arms production primarily stems from a country’s security needs, including domestic government procurement and demand for arms imports. Furthermore, a country’s economic scale and R&D strength contribute to increased arms sales.

JEL: L64, E2, F14, H56.