Why Do Small States Produce Arms? The Case of South Korea

Abstract

Armaments production provides us with an intriguing case where wecan challenge widely held assumptions of a nations economic rationality.Beginning in the 1970s, the Republic of Korea (ROK) initiated an aggressivedefense industrialization program, with the long-term goal of establishinga basic foundation for a self-defense capability for the 21st century. Aftermore than 30 years of significant public and private inputs in infrastructureand technology, however, the ROK still possesses only limited capacities forself-reliant arms production, and, in general, indigenous arms productionhas turned out to be neither technologically practicable nor cost-effective. Yet,even in the face of such intimidating technological and economic challenges,the ROK continues to pursue an ambitious, overly optimistic, and perhapseven naive strategy of defense industrialization and arms production. Theanswer to explaining the ROKs rather idiosyncratic arms-procurement and-production decision-making behavior lies perhaps more in more intangiblevariables, beyond the limited confines of comparative advantage supportedby assumptions of economic rationality. In particular, in the case of the ROK,one must take into account such powerful if hard-to-quantify incentives associal psychology (such as collective memory) and status (such as nationalpride and technonationalism). Ultimately, armaments production has itsown operating logic, and the justification for domestic defense manufacturingoften goes beyond the narrow confines of sectoral competitiveness.