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South Korea's defense industry : Increasing domestic capabilities and global opportunities

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  • South Korea's defense industry
  • Weitz, Richard
  • Korea Economic Institute of America


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Title South Korea's defense industry
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Sub Title

Increasing domestic capabilities and global opportunities

Material Type Articles
Author(English)

Weitz, Richard

Publisher

[Washington, D.C.]:Korea Economic Institute of America

Date 2014
Journal Title; Vol./Issue Academic Paper Series: On Korea:vol. 7
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Trade
Industry and Technology < Science/Technology
Government and Law < National security
Holding Korea Economic Institute of America

Abstract

Since the end of the Korean War, the United States has been the largest supplier of defense systems to the Republic of Korea (ROK). The imperative of maintaining military interoperability with the U.S. armed forces often proved a decisive factor for ROK decision makers. However, ROK officials have tried to increase the amount of military equipment, technology, and services that South Korea acquires from non-U.S. ources, with a priority given to domestic suppliers. ROK procurement officials have concluded that U.S. companies do not always provide the best deals in terms of cost, performance, and timeliness. In addition, they are frustrated with the restrictions and terms typically associated with U.S. defense imports, especially limitations on the transfer and re-sale of U.S. technologies as well as the problems entailed in meeting South Korean demands for substantial offsets. ROK governments have also sought as much as possible to draw on the country’s own
burgeoning defense industries. At first, ROK defense companies limited private R&D spending, overcapacity and other structural inefficiencies, small number of exportable products, limited competitiveness in foreign markets, and bans on the sale of items with U.S. technology to third countries constrained their actual and potential contributions. But over time ROK firms have overcome many of these obstacles. In addition, the same factors that have enabled South Korea’s industry to substitute for previously imported defense items have made them better able to compete for foreign sales: the growing sophistication and size of South Korea’s civilian economy, the companies’ improving human capital and productivity, mandatory technology transfers and offsets, and extensive ROK government support for the industry.