Keep the Momentum in Poland... "K-Defense to Double Employment When Advancing to Four Major Powers"

Federation of Korean Industries Report on 'Economic Effects and Challenges of Becoming a Top 4 Arms Exporter'
Ranked 9th in 2021... Employment to Increase from 33,000 to 69,000 by 2027 if Ranked 4th

Analysis shows that if Korea's defense industry (K-Defense) rises to become one of the world's top four arms exporters as planned by the government, employment is expected to double compared to current levels. The government announced last November that Korea aims to become one of the top four global defense exporters by 2027.

On the 17th, the Federation of Korean Industries (FKI) released a report titled "Economic Effects and Challenges of Becoming One of the World's Top Four Defense Exporters," commissioned to Shim Soon-hyung, a senior researcher at the Korea Institute for Industrial Economics and Trade. According to the Stockholm International Peace Research Institute (SIPRI), Korea ranked 9th in export share from 2018 to 2022. With advances such as entering the Polish market, Korea's defense export orders increased about sixfold in two years, rising from $3 billion (approximately 3.8 trillion KRW) in 2020 to $17.3 billion (approximately 22 trillion KRW) last year.

The report estimates that if Korea becomes one of the top four defense exporters by 2027, sales will increase by 86.8%, from 15.9 trillion KRW in 2021 to 29.7 trillion KRW, and employment will grow by 109.1%, from 33,000 to 69,000 jobs. The employment figure excludes the "indirect effects" on related industries outside the defense sector. Because it is difficult to obtain reliable multipliers for the defense industry, the report estimates only direct effects, unlike other industries that include indirect effects.

Minister of Land, Infrastructure and Transport Won Hee-ryong signed an MOU for cooperation in Ukraine reconstruction with Yadwiga Emilevich, the plenipotentiary representative for Poland-Ukraine development cooperation, at the agreement signing ceremony at the Presidential Palace in Warsaw on the 13th (local time).
[Photo by Yonhap News]

The report proposed four measures to increase exports to major arms-importing countries such as Saudi Arabia, Egypt, and India: expanding support for local production, establishing a system to respond to technology transfer, increasing financial support for arms-importing countries, and utilizing economic and industrial cooperation strategies.

While importing countries prefer local production, Korean companies have faced difficulties finding local partners. The report stated, "It is advisable to promptly establish local bases by activating the embassy, KOTRA trade offices, and the defense industry 'Team Korea' system, and to use these as marketing points for exports to neighboring countries."

Considering the risk of technology leakage, the report advised that the possibility of technology transfer by technology level should be quantified. It also recommended promoting the conclusion of basic credit agreements between arms-importing countries and export-import banks to accommodate low-interest loans and long-term installment repayments for importing countries. Additionally, it suggested proactively supporting projects to improve aviation infrastructure in importing countries and technology exchange programs.

K2 tank arrived at Gdynia Port, Poland.
[Photo by Hyundai Rotem]

The report also presented three challenges to improve the qualitative level of defense exports: supporting participation in the global defense supply chain, expanding joint development of weapon systems, and utilizing overseas production facilities.

The United States grants foreign companies only subcontractor status when engaging in defense cooperation projects. The report advised supporting efforts to lower supply chain entry barriers through the use of Global Partnership (GP) and mutual certification of the Cybersecurity Maturity Model Certification (CMMC) system.

It emphasized the need to promote joint development projects for advanced weapons development, production, and export with the United States. This involves selecting weapons that both Korea and the U.S. want to secure, such as hypersonic guided weapons, and jointly conducting development, mutual quality certification, and marketing. Overseas production facilities should be used as footholds for exports to neighboring countries. Establishing a local production base in Poland would facilitate access to countries like Romania and Slovakia.

Choo Kwang-ho, head of the Economic and Industrial Headquarters at FKI, said, "The defense industry requires advanced technology and highly skilled personnel and is directly linked to national defense capabilities. It is necessary to prepare strategies for both quantitative and qualitative growth to sustain export momentum."

This content was produced with the assistance of AI translation services.