International trade in armaments

International flows of armaments have become increasingly commercialized. Consider the United States, one of the largest arms producers in the world. In the period 1974-83, the United States shifted from providing arms mostly as military assistance to exporting on commercial terms, as shown in Table 5.1 and Figures 5.1 and 5.2. This trend continues at present.

Arms flows are increasingly being transacted through the market, rather than being part of a political process. This chapter examines trade in armaments, from the economic point of view, as an important sector of the international market.

North–South trade in armaments

The most rapidly growing segment of the international market in armaments has been trade between the North and the South. As a matter of fact, armaments trade has shifted dramatically to become almost exclusively a North–South trade. In 1963, the North exported 97% of all armaments traded; of this, 50% was purchased by other countries in the North. These proportions changed strikingly in the past two decades: In 1982, the North still exported a very large fraction of armaments traded, 87%, but now 82% of these exports were purchased by the South. The trade in armaments is currently overwhelmingly a North–South phenomenon: The North exports almost all arms traded and the South imports most of them. Figure 5.3 shows the development of North's and South's participation in the international market in armaments: The underlying data are in Table 5.2.