Weakest Defense Industry : Investors in the defense and aerospace industries need to understand the political, economic, and societal risks in any potential markets before investing. Risk analysis involves understanding not only the general risks of a country, but also which sub-sectors within that market have additional risks. The strength of a country’s defense industry is one such indicator of risk.
This article lists the top ten countries with the weakest defense industry based on data from Statista, the World Bank, and other sources. Each of these countries has some combination of characteristics that make their defense sector more prone to risk than others. Some are lagging behind technologically, some have little local demand for their military equipment or services, some have weak fiscal management or regulatory institutions, and some have high levels of corruption or geopolitical tensions that could impact potential foreign manufacturers or suppliers…
One of the most oil-rich countries in the world, Angola is well-endowed with natural resources, but has had little success in manufacturing or exporting goods that other countries might buy. The country’s large defense budget is funded almost entirely by the proceeds from oil production, and the locally developed defense industry is almost non-existent. Government corruption has been endemic for decades, and while state spending on defense is not necessarily a sign of corruption, it is a likely indicator of poor fiscal management or poor prioritization of spending.
Bangladesh has a long history of being a transit hub for trade and migration between South Asia and Southeast Asia. This has sometimes made it a target of increased geopolitical tensions, but it has also made it a destination for refugees fleeing violent areas. Due to these challenges, Bangladesh has had a relatively large defense budget for many years, but due to little local demand and lack of technological capacity, most of the equipment and services have been imported. The government has tended to favor higher cost, higher-end imported goods, which some analysts say may be due to corruption.
Djibouti is a small country located in Northeast Africa between Eritrea and Somalia. It is home to the only significant U.S. military base in Africa, which houses approximately 4,000 troops and civilians, as well as a significant number of French troops. Despite this, the country’s defense sector is weak, with most equipment and services imported from France. There is some local manufacturing, but the benefits of that go mostly to the country’s president, who is the majority shareholder in the companies. Djibouti is experiencing significant political and economic instability, and its government has limited ability to provide security or stability to its people.
Ecuador is a country in South America with a relatively poor economic history and a long history of shifting between authoritarian and democratic rule. The country has had a relatively large defense budget for many years, but much of that equipment and service is supplied by Russia, and some analysts fear that Ecuador may be drawn into future geopolitical conflict between Russia and the West. Ecuador’s government has weakened rule of law and a history of corruption.
Kenya is a country on the eastern coast of Africa that experiences significant migration and trade with neighboring countries. It has a long history of instability, including an ethnically-charged civil war in the late 1960s, the genocide of the 1980s, and a long-running insurgency in the North. The country’s defense budget has been relatively large, but much of the equipment and services have been imported, with some going to Chinese manufacturers. Kenya has a weak rule of law and a long history of political and ethnic strife, which has often led to a government with limited ability to enforce the law or provide for its people.