Reasons Behind the Successful Growth of the Defense Market in GCC

When it comes to the defense market, the GCC countries rank among the world's leaders in spending, extending a vast economic development opportunity for the GCC. Besides, multiple offset programs are the key to opening that opportunity.

The growth of the GCC Defense Market is supported by the existing geopolitical stresses among GCC countries, allowing the armies to increase military power. Hence, it points to massive investments in the defense sector. Furthermore, the need to improve the local defense manufacturing firms by GCC countries and their applications shall generate lucrative opportunities for the market in the coming years.

The leading players in the GCC Defense Market are Saudi Arabian Military Industries, Emirates Defence Industries Company, Advanced Electronics Company, Military Industries Corporation, Dahra Engineering & Security Services LLC, Lockheed Martin Corporation, The Boeing Company, Elbit Systems Ltd, Israel Aerospace Industries, Raytheon Company, Rheinmetall AG, Aselsan AS, Northrop Grumman Corporation, Thales SA, Honeywell International Inc., BAE Systems PLC, Rockwell Collins, L3 Technologies Inc., Airbus SE, Leonardo SpA.

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The Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—together spend nearly $80 billion a year on defense, establishing the region third among the world's largest defense spenders, following the United States & China. At more than $48 billion a year, Saudi Arabia leads the GCC countries in defense spending.

The defense sector in Saudi Arabia is likely to increase in the forecast years due to Saudi Arabia's aim to extend its armed forces because of the growing conflicts in the GCC region. The Defense expenditure of Saudi Arabia shall continue to remain highest among GCC nations in the forecast period prominently due to their involvement in military conflicts in the Middle-East and African region.

Around the world, defense offset programs have drawn criticism because of differences in producing economic value. Indeed, giving knowledge and technology to boost manufacturing, information communications technology (ICT), or other businesses in recipient countries can be tricky. Yet with the proper incentives for various participants like contractors who want to maintain the intellectual property, exporting countries who want to keep jobs, and recipient countries who want to eliminate barriers to developing industrial ecosystems to take advantage of the moment.

These incentives & overcoming other challenges demand more than well-orchestrated organizations of offset policies & national strategies. It requires business pragmatism and active incentive management to bring together the interests of the public & private sectors and the exporting and recipient countries toward the GCC defense Market.