The global arms industry just posted its strongest year on record. According to a new report by the Stockholm International Peace Research Institute (SIPRI), the world’s 100 largest defense manufacturers raked in a combined $679 billion in 2024—a 5.9 percent jump over the previous year. Behind that number lies a reshaped landscape of power, conflict, and economic dependency that’s quietly redrawing the map of global security.
Wars Drive Demand, and Demand Redefines Strategy
For the first time since 2018, all five of the world’s biggest defense firms saw their weapons sales climb. The war in Ukraine, the conflict in Gaza, and rising geopolitical frictions have supercharged demand across every major region. Western defense giants, particularly in the U.S. and Europe, led the surge. Only Asia and Oceania bucked the trend—largely because of mounting problems inside China’s defense industry.
The boom has triggered a scramble to expand: companies are opening new plants, acquiring competitors, and scaling up production lines. “Global arms revenues hit an all-time high last year as manufacturers capitalized on soaring demand,” said Lorenzo Scarazzato, a researcher with SIPRI’s Military Expenditure and Arms Production Program. “But even as they scale up, they face mounting challenges that could inflate costs and delay deliveries.”
America’s Arsenal: Growth Amid Cost Overruns and Delays
U.S. companies remain the industry’s powerhouse, taking in $334 billion in weapons sales last year—a 3.8 percent increase. Thirty out of thirty-nine American firms on SIPRI’s Top 100 list boosted their military revenues, led by familiar names like Lockheed Martin, Northrop Grumman, and General Dynamics.
Yet many flagship U.S. defense programs are mired in delays and budget overruns. The F-35 fighter jet, Columbia-class submarine, and Sentinel ICBM are all behind schedule and over cost. Those overruns ripple through the Pentagon’s procurement strategy, forcing recalculations of when—and at what price—the next generation of American weapons will actually reach the field.
“These delays and cost hikes inevitably affect U.S. military planning and spending priorities,” noted SIPRI researcher Xiao Liang. “They could undermine Washington’s efforts to rein in excessive defense costs and improve budget efficiency.”
Europe Rearms—and Runs Into Supply Chain Trouble
Europe’s defense sector, too, is booming. Of the 26 European (non-Russian) firms on SIPRI’s list, 23 reported revenue growth. Combined, their arms sales soared 13 percent to $151 billion—fueled by the war in Ukraine and the perception of a resurgent Russian threat.
The Czech-based Czechoslovak Group posted the fastest growth of any company in the Top 100—up a staggering 193 percent to $3.6 billion, mostly from supplying Ukraine. Ukraine’s own state-owned defense conglomerate, Ukrainian Defense Industry, saw a 41 percent jump to $3 billion.
“European defense firms are investing heavily to meet surging demand,” said SIPRI’s Jade Hiberto Ricard. “But securing the raw materials to sustain that expansion is becoming a real headache. Europe’s dependence on critical minerals is a major vulnerability.”
Before the war, Airbus and Safran sourced roughly half their titanium from Russia; now they’re scrambling for alternatives. Meanwhile, China’s export restrictions on key minerals have raised alarms in France and Germany, where Thales and Rheinmetall both warned last year that reconfiguring supply chains could sharply increase costs.
Russia’s War Economy Defies Sanctions
Despite Western sanctions and acute shortages of components, Russia’s two biggest arms producers—Rostec and United Shipbuilding Corporation—grew their combined sales by 23 percent to $31.2 billion. Domestic demand, fueled by the war effort, more than offset the collapse in exports.
“Beyond sanctions, Russian arms makers are struggling with a shortage of skilled labor, which could slow production and stifle innovation,” said SIPRI senior researcher Diego Lopes da Silva. “Still, the resilience of Russia’s defense industry during the war has been consistently underestimated.”
Asia’s Uneven Outlook: China Slips, Japan and South Korea Surge
Asia and Oceania was the only region to post a decline. Combined arms sales there fell 1.2 percent to $130 billion, dragged down by a 10 percent drop among China’s eight Top 100 firms. NORINCO—the country’s main ground systems producer—saw its revenues plunge 31 percent.
“Corruption scandals in China’s defense procurement sector have led to postponed or canceled contracts,” explained SIPRI’s Nan Tian. “That clouds the timeline for China’s military modernization.”
By contrast, Japanese and South Korean firms surged ahead. Japan’s five Top 100 defense companies expanded revenues by 40 percent to $13.3 billion, while South Korea’s four leading manufacturers grew 31 percent to $14.1 billion. Hanwha Group, Seoul’s largest defense firm, reported a 42 percent spike—more than half from exports.
The Shape of a New Arms Economy
Behind the numbers lies a deeper transformation. The arms trade has become not just a response to war but a driver of strategic realignment—reshaping industrial bases, reordering alliances, and entrenching new dependencies. From Washington to Warsaw, from Seoul to Stockholm, the global architecture of power is being rebuilt—not through treaties or diplomacy, but through contracts, supply chains, and assembly lines.
The Middle East Joins the Big Leagues of Global Arms Trade
For the first time, nine companies from the Middle East made it into SIPRI’s Top 100 list, generating a combined $31 billion in weapons sales in 2024—a 14 percent jump year over year. Three Israeli defense firms accounted for more than half that total, with revenues up 16 percent to $16.2 billion.
“Growing international criticism of Israel’s actions in Gaza appears to have done little to dent global demand for its weapons,” said Zubaida Karim, a researcher with SIPRI’s Arms Production and Military Expenditure Program. “In fact, many countries continued placing new orders with Israeli firms throughout 2024.”
Turkey also solidified its position as a regional arms power: five Turkish companies made the list, including newcomer MKE, pushing the country’s combined defense revenues to $10.1 billion—up 11 percent. The UAE’s state-owned EDGE Group reported $4.7 billion in military sales.
Elsewhere, India’s three listed defense companies grew revenues by 8.2 percent to $7.5 billion, thanks largely to government procurement. In Germany, four companies posted a collective 36 percent surge to $14.9 billion amid booming demand for air defense systems, ammunition, and armored vehicles.
And on the other side of the Atlantic, SpaceX entered SIPRI’s Top 100 for the first time after doubling its military-related revenues to $1.8 billion, driven by defense and space contracts. Indonesia, too, made its debut with DEFEND ID, whose sales climbed 39 percent to $1.1 billion as the government pushed to consolidate its defense sector.
Behind the Boom: A System Built on Conflict
At first glance, the soaring profits of defense contractors look like a byproduct of war, chaos, and fear. But the forces at work run much deeper. As Dwight Eisenhower once warned, the rise of a powerful military-industrial complex carries the risk of “unwarranted influence” over public policy. Today, that warning feels prophetic.
The new arms boom isn’t just about national security—it’s about the growing power of defense interests to shape policy itself. Governments increasingly justify higher defense spending not simply on security grounds but as an economic stimulus, a jobs program, or a tool for industrial policy.
That logic has profound consequences. It blurs the line between national defense and corporate profit, turning the defense sector into both a political force and an economic addiction. Meanwhile, the global security system remains fundamentally inefficient: higher spending has not delivered greater stability. Instead, it’s widened inequalities and diverted resources from the world’s most urgent needs.
A Decade of Relentless Growth
The numbers are staggering. Global military spending hit a record $2.72 trillion in 2024—up 9.4 percent from the year before, the fastest increase in a decade. Defense now consumes 2.5 percent of global GDP. No region cut its defense budget last year; every one increased it.
Europe saw the steepest rise, driven by the war in Ukraine. The Middle East followed closely, fueled by the conflict in Gaza and regional tensions. In many developing economies, social and infrastructure programs stagnated even as defense budgets soared past the trillion-dollar threshold.
The defense industry has expanded in lockstep. Total revenues for the Top 100 arms producers reached an unprecedented $679 billion—up 26 percent over the past decade. U.S. companies accounted for nearly half that total, at $334 billion (+3.8 percent), while European producers rose to $151 billion (+13 percent).
Asia’s picture is mixed: China’s defense giants saw a downturn due to procurement scandals and bureaucratic paralysis, while South Korea and Japan posted explosive gains of 31 and 40 percent, respectively, powered by exports of rocket and drone systems. In the Middle East, Israel and Turkey led the region’s 14 percent growth to $31 billion.
Even newcomers like SpaceX signal a changing landscape. Military space contracts and dual-use technologies are blurring the boundaries between defense, tech, and commerce—ushering in what analysts call the era of “military capitalism.”
The Geopolitics of Demand
Every region’s surge in arms sales mirrors its own security anxieties. Russia’s war in Ukraine has pushed NATO states into a procurement frenzy—ordering tanks, jets, missiles, and artillery at double-digit growth rates. In Asia, a regional arms race is unfolding: China is stockpiling missiles and air-defense systems amid tensions over Taiwan, while Japan and South Korea ramp up their own spending in response to North Korea and broader regional militarization.
In the Middle East, the war in Gaza has driven demand for missile defense, drones, and munitions. Each buildup provokes another, creating a domino effect of mutual escalation—a textbook “security dilemma.” But unlike during the Cold War, the incentives today aren’t just strategic. They’re financial. Arms spending sustains jobs, fuels profits, and keeps entire political ecosystems in motion.
The Political Economy of Perpetual War
The cost of this new arms race goes far beyond budgets. As the UN Secretary-General has warned, the world’s surging defense expenditures coincide with stagnation—or outright backsliding—on the Sustainable Development Goals. Funds that could have gone to health, education, or climate action are being funneled into missiles and munitions.
In developing countries, aid flows are drying up while defense costs climb. If current trends persist, global military spending could reach $6.6 trillion by 2035, raising the specter of budget crises and widening inequality.
The deeper threat, however, lies in the political influence of defense corporations themselves. Record profits make them indispensable to governments—and dangerously powerful. A feedback loop emerges: manufacturers thrive on the perception of threat, and politicians thrive on the jobs and contracts those companies provide.
Eisenhower’s warning from 1961 about “the acquisition of unwarranted influence” was never more relevant. The permanent arms economy he feared has arrived—and its logic now defines the politics of security, industry, and power itself.
International mechanisms meant to regulate the arms trade still exist, but their effectiveness has eroded. The flow of weapons keeps growing regardless of treaties or restraint. What’s left, increasingly, is a world where war and profit sustain each other—and peace has no clear business model.
Regional Fallout and Historical Echoes
The flood of defense revenues now reshaping the global economy plays out differently depending on political systems. In democracies, swelling military budgets strain public finances and force hard choices. Legislatures have to redirect funds from social programs to sustain defense procurement. The U.S. remains trapped in a familiar “overspending cycle”: programs like the F-35 fighter jet and Columbia-class submarines routinely exceed cost projections, yet bureaucratic inertia and political pressure keep the money flowing.
Europe has followed a similar path. For the first time in decades, EU members collectively breached the 2 percent of GDP threshold on defense, funnelling billions into F-35s, Leopard tanks, and new missile-defense systems. The trade-off is stark: bolstering security while depleting social resources, a mix that could eventually breed public frustration and political turbulence.
Authoritarian and semi-authoritarian states face a different dynamic. Russia, despite sanctions, has ramped up weapons production by mobilizing domestic demand. Major arms producers have pushed their revenues back to levels comparable with the early 2010s. That growth stems from a massive rearmament drive and a fourfold increase in 152mm ammunition output since 2022. Still, the industry operates under deep secrecy; key production data are classified, and attempts to assess real volumes often spark backlash within Russia’s own defense bureaucracy. The country is moving toward what analysts call “self-sufficient militarism”—offsetting the loss of imports with surging domestic orders while seeking new export markets, a pattern reminiscent of the Soviet Union’s late–Cold War economy.
Across Asia, the trend is equally complex. China’s demand has slowed amid anti-corruption reforms and bureaucratic reshuffling, yet Beijing continues to spend heavily on modernization. That, in turn, alarms its neighbors. India and Pakistan are deepening their rivalry; Japan and South Korea are accelerating rearmament programs amid rising regional volatility. Together, they’re transforming Asia into one of the most rapidly militarizing regions in the world.
Globally, the consequences are cascading. The surge in arms exports has triggered what experts describe as a “blind arms race”: the more one state arms itself, the faster its neighbors follow. That dynamic fuels instability around existing flashpoints and heightens the risk of accidental escalation. Meanwhile, the economic clout of defense conglomerates grants them outsized influence over foreign policy. In some cases, corporations have become direct instruments of state diplomacy, advancing national interests through weapons deals. The result is a growing “crisis of control,” as defense spending imperatives clash with efforts to manage international crises. Strengthening the defense sector may boost deterrence—but it also narrows diplomatic flexibility, making compromise politically harder.
Four Possible Futures
Scenario 1: Prolonged Escalation.
If the wars in Ukraine and the Middle East drag on or widen, the military-industrial complex will gain further momentum. Defense budgets will keep climbing, spurring new procurement waves and modernization drives. Europe could fragment into multiple security zones: the U.S.-NATO bloc, a fortified eastern flank, and Russia aligned with select Central Asian partners. That setup would fuel an arms race, raise the risk of close encounters between rival forces, and accelerate the militarization of civilian technology. Defense contractors would post record profits; taxpayers would shoulder the burden as social priorities fade into the background.
Scenario 2: De-escalation and Reset.
A breakthrough—say, a durable peace deal in the Middle East or a guaranteed settlement in Ukraine—could trigger a steep drop in defense demand. The industry would face overcapacity, layoffs, and political pressure to reallocate resources. Governments could redirect spending toward social recovery and climate goals. Arms-control initiatives might regain momentum. But this path demands political courage: the “war economy” now sustains powerful interests invested in the status quo.
Scenario 3: The Tech Revolution.
A disruptive leap in military innovation—mass drones, autonomous strike systems, hypersonic weapons—could force the industry to reinvent itself. Artificial intelligence, advanced materials, and robotics would define the next battlefield. Legacy defense giants might lose ground to startups and tech conglomerates, yet overall profitability would persist thanks to the premium on innovation. The geopolitical balance would tilt toward those who master these technologies first.
Scenario 4: Crisis of Trust.
The darkest outlook envisions a collapse of international institutions. If global politics devolve into uncontrolled confrontation, arms trade could spiral into chaos. Disarmament regimes would freeze, and states would hoard weapons preemptively. The result: unchecked militarization, mounting economic strain, and deepening ecological damage. Global governance itself could fracture under the weight of permanent conflict.
Each trajectory shapes its own political logic. Bigger defense budgets often empower hawkish factions and shrink space for social policy. Lower demand for arms, conversely, tends to stabilize societies and free up resources for development. The global balance between escalation and restraint will determine whether the world drifts into a new “Cold War” or rebuilds the mechanisms of collective security.
Policy Takeaways: Rethinking the Economics of War
The record profits of 2024 mark more than a business milestone—they signal a systemic shift in how power operates. The defense industry is no longer just a supplier; it’s becoming a political actor in its own right. That reality calls for structural reforms, not cosmetic ones.
1. Transparency and Fiscal Oversight
Governments must strengthen budget accountability and independent auditing of defense programs. Parliaments should open military spending to civilian review and report regularly on its impact on national development. International forums—from the UN General Assembly to regional security councils—can institutionalize debates on how defense budgets affect sustainability and equity.
2. Security Through Development, Not Militarization
States and alliances should embed disarmament goals into aid and development frameworks. One pragmatic measure: capping military spending at a fixed share of GDP—say, no more than 3 percent—to balance defense needs against social and demographic pressures. That ceiling would curb the dominance of the military economy and limit its social cost.
3. Strengthening Arms Trade Regulation
Existing treaties remain too weak to restrain the global weapons market. Expanding membership, tightening export standards, and designating “no-transfer zones” for specific weapons could enhance control. Linking international aid to transparent arms policies—and empowering global courts and oversight commissions—would add real leverage.
4. Reviving Diplomacy and Peace Infrastructure
Diplomatic engagement must become the core instrument of security. That means revitalizing bilateral and multilateral talks, building new regional security platforms, and reforming institutions like the OSCE to function as mediators and early-warning systems.
5. Corporate Accountability and Conversion
Defense corporations should adopt ethical and environmental standards: transparent contracts, audited expenditures, and public disclosure of export data. Governments can incentivize “conversion” programs—redirecting military production toward civilian industries—to reduce dependence on conflict-driven demand.
6. Building Alternative Economies
Diversification is key. Investing in education, research, green energy, and high-tech manufacturing can generate sustainable growth without feeding the war economy. International lenders can reward disarmament progress with softer credit terms, making peace economically attractive.
Conclusion: The Logic of Profit vs. the Logic of Peace
The unprecedented expansion of the arms industry reflects a deeper imbalance: global politics is increasingly governed by the logic of conflict, and conflict by the logic of profit. The challenge for policymakers, economists, and diplomats is to break that feedback loop.
If the world’s institutions can pivot toward transparency, accountability, and a security model grounded in development, there’s still a path out of this cycle. If not, the paradox of “getting rich on war” will only deepen the divides—and push the global system closer to a permanent state of managed instability.