The defense industry of South Korea is the main supplier of armaments to the Republic of Korea's Armed Forces. Originally heavily reliant on the United States to supply weapons to its armed forces, South Korea began manufacturing its own weapons through the country's industrialization and military modernization efforts. Today, South Korea enjoys a robust defense industry and is the world's 8th largest weapons exporter.
History
Background Following South Korea's liberation from Japan on 15 August 1945, the Republic of Korea established its first independent government along with its own armed forces on 15 August 1948. However, the ROK's military was unprepared and ill-equipped to fight due to their lack of personnel, training, and heavy weapons. In contrast, North Korea had significantly more personnel and benefited from the Chinese and Soviets in the form of rigorous training, manpower, military organization, and the supply of various weapons. This would prove devastating at the beginning of the Korean War, as the ROK military was pushed to the brink of defeat until the US-led UN coalition intervened in the war. South Korea's experience during the war emphasized the country's dependence on the United States for its defense. A drive for the ROK military to be better equipped and trained gradually emerged, but economic underdevelopment and instability prevented the country from developing its own defense industry, forcing reliance on the US until the late 1960s.
Under the Third and Fourth Republic of Korea
In 1969, President Richard Nixon announced that the United States would begin to reduce its military presence in Asia and allow its Asian allies to be in charge of their own security. The result of decreasing American commitment, combined with fresh memories of North Korean military provocations, forced South Korea to become self-reliant.
The 1970s would mark the beginning of South Korea's defense industry. Authoritarian president Park Chung Hee implemented military reforms to modernize the military and kick-start South Korea's domestic defense industry. Concurrently, President Park implemented reforms and policies to industrialize South Korea, paving the way for massive economic growth. Based on the Second Republic's (planned) five-year economic plan, President Park would initiate his own five-year plans, normalize relations with Japan in 1965, and maintain close ties with the US to receive the much-needed economic aid to accomplish his goals. By the Third Five-Year Plan (1972–1976), South Korea would commit to investing and developing its own heavy and chemical industries to achieve independent defense industrialization. This resulted, as early as 1973, in the enactment of the Heavy and Chemical Industry (HCI) Development Plan. This economic plan aimed to switch South Korea's production from light manufacturing to heavy and chemical industries, focusing on shipbuilding, steel, heavy machinery, non-ferrous metals, electronics, and chemical/petrochemicals. The HCI plan was partially motivated by "self-defense against North Korea." (The U.S. withdrew some troops from South Korea in 1971 amid tension over human rights.) Several key military reforms during that time included the Agency for Defense Development (ADD) in 1970, the Special Law on Military Procurement, and the Yulgok Plan in 1974.
The ADD primarily helped South Korean defense industrialists streamline research and development, acquire foreign military technologies, and directly engage in product development. The first weapon that South Korea would produce on its own (albeit with restrictions) were licensed Colt M16 rifles in 1971. Other US-designed weapons and ammunition would later be produced under license in the mid-1970s. Between 1977 and 1984, defense contractors would also begin to reverse engineer US-made weapons to help research and develop their own domestic weapons. The Special Law on Military Procurement encouraged private firms to participate in the defense industry by providing incentives. These incentives included government financing, preferential financial agreements, reduced taxes and tariffs, concession of plant sites, administrative support, exemption of military drafting for skilled employees, and government guarantees of corporate survival and rescue for companies that showed signs of financial struggle. The National Investment Fund was established to provide financial resources to the nation's growing heavy and chemical industries. It later evolved into the Defense Industrial Promotion Fund in 1980 (until its dissolution in 2006) to allocate resources directly to the defense industry. The Yulgok Plan was launched to implement South Korea's military modernization and build up combat capabilities independently of the US. To accomplish these goals, indigenous arms production was prioritized by encouraging local production and procurement for the military.
President Park's intermingling of economic and defense policy was very successful, as the South Korean military and defense industry greatly benefited from the country's rapid economic growth and industrialization. By the time of the Fourth Five-Year Plan (1977–1981), South Korea's defense industry relied on a diversified base of suppliers, such as heavy industries, electronics, and shipbuilding. The country's shipbuilding industry in particular experienced rapid success as South Korea indigenously developed the Chamsuri-class patrol boat, which entered service in 1979.
However, the defense industry was not devoid of issues. As the country was under a military dictatorship at the time, policies and decision-making related to the defense industry were highly centralized under President Park and his technocrats in the Blue House, especially O Wonchol. As a result, decisions that were made were implemented quickly without public input or participation, including those involved in the defense industry. The consequences of having those decisions made in the absence of effective planning and coordination included inefficiency, redundancy, and oversaturation in the defense industry. The market became overcrowded with manufacturers competing with each other to manufacture every type of component in order to acquire a larger share of the arms market, preventing the South Korean defense industry from reaping the benefits of "higher quality and economies of scale that come from specialization."
Under the Fifth Republic of Korea Following the assassination of Park Chung-hee in 1979, South Korea experienced economic difficulties as well as political and social turmoil, lasting through the transition from the Fourth Republic to the Fifth. In the late 1970s, internal economic problems emerged from South Korea's rapid development due to the over-emphasis on heavy and chemical industries. Under Park Chung Hee's administration, heavy and chemical industries were overemphasized in the drive to develop a home-grown defense industry and modernize the military. The lack of proper investment and planning led to wasteful spending, and the economy began to experience an alarming increase in inflation rate. Combined with the 1979 oil crisis, an underdeveloped agriculture sector, and growing foreign debt, reckless investment in the defense industry contributed to the economic crisis between the late-1970s and mid-1980s.
As a result of the economic, political, and social crisis gripping South Korea in the early 1980s, President Chun Doo-hwan implemented reforms and changes to stabilize the country again. The Fifth Five-Year Plan (1982–1986) shifted the government's focus away from heavy and chemical industries. Decisions and responsibilities related to the defense industry and weapons development now fell under the purview of the Ministry of National Defense (MND) and the Ministry of Trade and Industry instead of the President. President Chun would also establish the Korean Institute for Defense Analysis (modeled after the US Institute for Defense Analyses) in 1979 as a means to further plan and coordinate the defense industry with the government through the MND.
The 1980s would see a relative decline (in absolute terms) in the defense industry's output combined with better efficiency overall. By the 1980s, the defense industry had matured enough to produce basic weapons and equipment, accomplishing the country's goal of its military becoming self-sustaining. However, as a result of accomplishing this raison d'être, the development of the defense industry itself became static. Furthermore, the market size and demands for military products decreased since South Korea achieved its conventional weapons needs without compensating with massive increases in military spending. The lack of new investment, profit, and growth discouraged manufacturers from investing in the defense industry, even with the government's promise of financial assistance. Soon, military production began to decrease, with some defense contractors even going bankrupt from this stagnation. Arms exports in particular were acutely affected, with $975 million in revenue in 1982 dropping to a mere $50 million in 1988.
Despite this, the shipbuilding sector would continue to produce indigenous warships throughout the 1980s: the Ulsan-class frigate, Donghae-class corvette, and Ganggyeong (Swallow)-class minehunter based on the Italian Lerici-class minehunter.
Late 1980s- Early 2020s Between the late 1980s and early 1990s, South Korea and its defense industry, under different administrations, experienced drastic changes due to both domestic and international events. In 1987, the country's political system transitioned from a military dictatorship to a democratic government. The early 1990s would also see Germany reunified, the collapse of the Soviet Union, and the subsequent end of the Cold War. As the threat of the Soviet military ended, the US began another phase of reducing its military presence in East Asia. In response, newly elected President Roh Tae-woo would implement new rounds of military reforms called the "August 18 Plan" or "818 Plan" on 18 August 1988. The plan aimed to further reduce South Korea's military dependence on the United States by further increasing self-reliance—"Koreanization of Korean defense", as Roh puts it. The defense industry would find itself reinvigorated as part of the 818 Plan, which includes restructuring the military and procuring new weapons. The plan desired the military to possess a balanced mix of highly advanced (albeit expensive) weapons and moderately priced conventional weapons. In addition, the air force and navy would increase and strengthen their assets to fill the gap the US military would leave behind.
In the late 1980s, South Korean Navy began pursuing the acquisition of larger submarines to supersede their 150-ton Dolgorae midget submarines to better protect critical shipping lanes from North Korean submarines. The Jang Bogo-class submarine was later developed in the 1990s based on the German Type 209 submarine. In 1989, South Korea's aerospace industry became more proactive in the defense business. Seoul announced that it would develop the Korean Fighters Program with McDonnell Douglas (now merged with Boeing) to help domestically develop a supersonic fighter jet within two decades of the announcement. South Korea would select the McDonnell Douglas F/A-18 Hornet to be co-produced, with Samsung Aerospace contracted to manufacture the engine and airframe while LG Corporation was subcontracted to manufacture the avionics. The deal, however, fell through, and the F-16 was later selected and built. Korean Air would also be contracted by the U.S. Air Force to handle maintenance of their fleet of F-4, F-15, A-10, and C-130 stationed in South Korea, Japan, and the Philippines.