Tag: defense spending

Defense spending refers to government expenditures on military capabilities, including personnel, equipment, R&D, and infrastructure. As a critical component of national budgets (averaging 2.2% of global GDP), it represents a $2.2 trillion market in 2024, driven by geopolitical tensions and technological advancements. The sector is dominated by state actors but heavily relies on private defense contractors like Lockheed Martin and BAE Systems.

Governments allocate funds through annual budgets or emergency appropriations, with contracts awarded via competitive bidding or sole-source procurement. The market is characterized by long project cycles (5–20 years), high barriers to entry (security clearances, capital intensity), and oligopolistic competition. Defense ETFs (e.g., ITA, PPA) and sovereign bonds are primary investment vehicles.

**Key Applications**
1. **Modernization Programs**: Upgrading legacy systems (e.g., F-35 fighter jets, hypersonic missiles) accounts for 40% of spending.
2. **Cybersecurity**: 25% annual growth in digital defense budgets post-Ukraine war.
3. **Space Militarization**: Satellite networks and anti-satellite tech demand surged 300% since 2020.