Abstract

South Korea has established the base for self-reliant defense and grown into an emerging defense exporter in 40 years since it first introduced a offset trade system in 1983, and aims to become the world's fourth-largest defense exporter by 2027. The purpose of this study is to draw implications for the development of Korea's defense industry and the expansion of defense exports from the perspective of offset trade. To this end, (1) the development process and status of Korea's defense industry were examined based on recent statistical data, and (2) the status of Korea's overseas purchase of weapons systems and defense exports were examined. Also, (3) after examining the current status of Korea's offset trade system, implications for the development of defense industry and the expansion of defense exports were drawn. In import offset trade, it is necessary to re-apply offset trade obligation to overseas purchase through FMS from the U.S.A., settle down the banking system, expand the offset value multiplier for SMEs, and strengthen the industrial cooperation quota system. In export offset trade, it needs to establish a cooperation system between government ministries by a strong control tower, form a consortium of government-defense companies for a proactive response system, introduce a mandatory reporting system for export offset trade, expand the policy support for defense export such as trade finance, and introduce a value offset system (SWAP).

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