ISRAEL’s ARMS INDUSTRY AND THE ECONOMICS OF WAR: HOW CONFLICT DRIVES THE GLOBAL WEAPONS MARKET
Israel, War and the Global Arms Trade: What the Numbers Really Tell Us
Wars are fought on battlefields, but their consequences extend far beyond them.
Behind every military operation exists a much larger system involving governments, defense companies, research institutions, weapons manufacturers, technology firms and international arms markets.
The continuing war involving Israel and Palestinians has therefore raised an important question for anyone interested in international affairs:
How does modern warfare affect the global weapons industry, and can military conflicts create economic incentives for the companies that produce weapons and defense technology?
Widely circulated social-media posts makes several strong claims about Israel, the United States, Gaza and the international arms trade. Some of those claims are based on real developments, while others require clarification.
Understanding the difference is important.
Israel Has Become One of the World’s Major Arms Exporters
Israel is a relatively small country, but its defense industry has become an important player in the international arms market.
According to the Stockholm International Peace Research Institute (SIPRI), Israel was the world’s seventh-largest supplier of major arms during 2021–25, accounting for 4.4% of global arms exports. Its share increased from 3.1% during 2016–20. SIPRI says Israel overtook the United Kingdom during this period. (SIPRI)
For the previous five-year period, 2020–24, Israel ranked eighth, with a 3.1% global share. India was its largest recipient, accounting for 34% of Israeli major-arms exports during that period. (SIPRI)
So the statement that Israel is a major arms exporter is supported by international data—but the exact ranking depends on the years being discussed.
Israel’s Defense Exports Have Reached Record Levels
Israel's own Ministry of Defense reports an even more striking figure.
In 2024, Israeli defense industries signed export contracts worth approximately $14.8 billion, a 13% increase from 2023. The ministry said defense exports had more than doubled over five years. More than half of the 2024 deals were valued at more than $100 million. (משרד הביטחון)
And the growth continued.
According to Israel's Ministry of Defense, defense-export agreements reached approximately $19.2 billion in 2025, another record and nearly 30% higher than the 2024 figure. (משרד הביטחון)
This provides an important piece of economic context:
Israel's defense industry has been experiencing extraordinary export growth during a period of intense regional conflict.
That does not, by itself, prove that wars are deliberately created for profit. But it demonstrates that military demand can coincide with substantial commercial growth in the defense sector.
What Does “Battle-Tested” Mean?
One of the most interesting issues in the original post is the phrase “battle-tested.”
Military technology is often marketed differently from ordinary consumer products.
A smartphone can be tested in a laboratory. A vehicle can be tested on a closed track.
But military systems such as missile-defense systems, surveillance equipment, drones, battlefield communications and electronic-warfare technologies operate in extremely complicated environments.
Actual combat can provide manufacturers and military organizations with operational experience that cannot easily be reproduced in a laboratory.
Israel's Ministry of Defense itself said in its 2024 export report that the operational performance of Israeli systems and their “proven battlefield performance” contributed to international demand for Israeli defense technology following the outbreak of the war in October 2023. (משרד הביטחון)
This is one reason the concept deserves public attention.
However, saying that a product has been used in combat is not the same thing as independently proving that the product performed better than alternatives. Marketing claims still need to be evaluated separately.
Gaza and the Human Cost Behind the Numbers
The economic figures tell only one part of the story.
The other side is the human cost of warfare.
The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) continues to report extensive destruction, civilian casualties, displacement and humanitarian needs in Gaza. In its September 2026 reporting, OCHA described widespread destruction and continuing risks to civilians, including shortages of medical supplies and essential infrastructure. (OCHA OPT)
For example, OCHA reported that a war-damaged residential building in Gaza City collapsed on September 16, 2026, killing 21 people, including 12 children, according to Gaza Civil Defence. (OCHA OPT)
These events illustrate an important principle when studying the economics of war:
The financial value of weapons contracts and the human cost of using those weapons are two completely different measurements.
A billion-dollar defense contract represents economic activity.
It does not measure the value of a human life, the destruction of a home, the displacement of a family or the long-term consequences for a society.
How Does the United States Fit Into This Picture?
The original post describes American military assistance to Israel as if U.S. taxpayers simply transfer billions of dollars directly to Israeli weapons companies.
That explanation is too simplistic.
The United States provides Israel with substantial military assistance through several mechanisms, including Foreign Military Financing (FMF), missile-defense programs and arms transfers.
A Congressional Research Service report explains that the current U.S.-Israel 10-year memorandum of understanding covers approximately $38 billion in military assistance for FY2019–FY2028, including $3.3 billion annually in FMF and $500 million annually for joint missile-defense programs. Additional emergency funding has been provided since October 7, 2023. (Congress.gov)
The CRS also notes that Israel uses U.S. Foreign Military Sales programs to procure American defense equipment. Therefore, U.S. military assistance can support U.S. defense manufacturers as well as Israel's military capabilities. (Congress.gov)
This distinction matters when discussing the economics of war.
How Much Has the United States Spent Since October 7, 2023?
There are different ways to calculate the financial cost because researchers may include different categories of military assistance and regional operations.
A Brown University Costs of War study estimated that the United States had approved $17.9 billion in security assistance for Israeli military operations in Gaza and elsewhere during the first year after October 7, 2023, while estimating total U.S. spending on Israeli operations and related U.S. regional operations at at least $22.76 billion for that period. (Costs of War)
A subsequent 2025 Costs of War analysis estimated U.S. military aid to Israel at $21.7 billion during the first two years after October 7, 2023, excluding tens of billions of dollars in future arms-sale agreements. (Costs of War)
These figures are estimates produced using specific methodologies, rather than a single universally accepted measure of the total economic cost.
Israel’s Defense Companies Have Also Experienced Strong Growth
The relationship between war and defense-company revenue becomes particularly interesting when examining individual companies.
Israel Aerospace Industries
Israel Aerospace Industries (IAI), a major state-owned aerospace and defense company, reported $6.1 billion in revenue in 2024, approximately 15% higher than in 2023.
Its military-group sales increased by approximately 15.5%, while exports accounted for about 66% of total revenue. (IAI)
The company's growth continued in 2025.
IAI reported approximately $7.38 billion in revenue in 2025, a 21% increase from 2024, with military-group sales rising approximately 23%. (IAI)
Elbit Systems
Elbit Systems is another major Israeli defense technology company.
In 2025, Elbit reported revenue of approximately $7.94 billion, an increase of 16.3% from 2024. Its order backlog reached approximately $28.1 billion, with about 72% of the backlog coming from customers outside Israel. (Elbit Systems)
These figures don't prove that particular military operations caused every dollar of company growth. Defense companies are affected by many factors, including national defense budgets, international security concerns, long-term procurement contracts and demand for specific technologies.
Nevertheless, they demonstrate that the defense sector can experience significant commercial growth during periods of heightened military demand.
India Is a Major Customer of Israeli Arms
According to SIPRI's data for 2020–24, India was the largest recipient of Israeli major arms, accounting for approximately 34% of Israel's major-arms exports. (SIPRI)
In the newer 2021–25 data, India remained Israel's largest recipient, accounting for approximately 29% of Israeli major-arms exports. Germany accounted for 21%, while the United States accounted for 7.8%. (DefesaNet)
This demonstrates that Israel's defense-export market is not dependent on one country or one conflict.
It is part of a much broader international defense-trade network.
Israel's Weapons Industry Is More Than Drones and Missiles
Another common misunderstanding is that Israel's defense exports consist mainly of weapons that directly attack targets.
The industry is considerably broader.
Israel exports or develops:
- Missile and air-defense systems
- Radar technology
- Electronic warfare systems
- Surveillance and observation equipment
- Intelligence systems
- Cyber and information systems
- Aircraft and avionics
- Armoured vehicles
- Communications systems
- Satellites and space systems
- Drones and unmanned systems
- Ammunition and weapons systems
In 2024, missile, rocket and air-defense systems represented 48% of the value of Israeli defense-export agreements, according to Israel's Ministry of Defense. (משרד הביטחון)
This is important because the global defense industry increasingly combines conventional weapons with software, sensors, artificial intelligence, communications and data systems.
What About 3D Printing and Companies Like Massivit?
The original posts also mentions Massivit and suggests that the company moved from entertainment-related applications into military production because killing people was more profitable.
Massivit is an Israeli industrial 3D-printing company whose technology has applications in aerospace and defense.
The company's own information says its systems can manufacture tooling and components for aircraft, ships, surveillance equipment and unmanned aerial vehicles. (Massivit)
In 2026, Massivit launched a defense-and-aerospace manufacturing platform called RapidWings, describing it as “combat-proven in Israel” and expanding it into the United States and Europe. (Massivit)
That is an interesting example of how manufacturing technology can move into defense applications.
The Global Arms Market Is Much Bigger Than Israel
According to SIPRI's latest data, the United States was responsible for 42% of global major-arms exports during 2021–25, making it by far the largest supplier.
France accounted for 9.8%, Russia 6.8%, Germany 5.7%, China 5.6%, Italy 5.1%, and Israel 4.4%. (SIPRI)
SIPRI also found that the global volume of major arms transfers increased 9.2% between 2016–20 and 2021–25, reaching its highest level since the end of the Cold War. (SIPRI)
Therefore, the economic relationship between conflict and the defense industry is a global phenomenon.
Why Do Countries Continue Buying Weapons During Wars?
There are several reasons.
1. National security
Governments may believe that military equipment is necessary to defend their territory or deter potential adversaries.
2. Regional instability
When neighboring countries increase military spending, governments may respond by purchasing additional weapons.
3. Technological advantages
Countries may seek advanced radar, missile defense, drones, electronic warfare and intelligence technologies.
4. Strategic relationships
Arms deals can strengthen diplomatic and military relationships between countries.
SIPRI notes that arms transfers can serve broader foreign-policy objectives as well as military purposes. (SIPRI)
5. Domestic defense industries
Governments may support domestic defense companies because the industry provides employment, technological development and export revenue.
This creates an important economic feedback loop:
Security concerns → higher military spending → weapons procurement → defense-industry revenue → investment in new technology → further international sales.
But this does not mean that every participant has the same motive, or that military conflict is necessarily created for commercial reasons.
The Controversial Question: Does War Create a “Business Model”?
This is where the social-media makes its strongest argument.
They essentially argues:
When governments buy weapons, defense companies earn money. When wars increase demand for weapons, companies can experience greater sales.
The first part is straightforward economics.
The second part is also observable in defense-industry financial data.
But a more difficult claim is that wars are intentionally created or prolonged because they are profitable.
That requires substantially more evidence.
There is a difference between:
“War can create economic opportunities for defense companies.”
and
“Defense companies cause wars because they want profits.”
The first is a subject that can be examined through economic data.
The second is a claim about causation and motive that requires specific evidence for each case.
Keeping this distinction clear is essential.
What Does “War Is Profitable” Actually Mean?
The phrase can be misleading.
A war may generate revenue for some companies while simultaneously causing enormous economic losses for governments and societies.
War can destroy:
- Homes
- Roads
- Hospitals
- Schools
- Businesses
- Electricity systems
- Water infrastructure
- Agricultural production
- Human capital
- Tourism
- Investment
- Public finances
Therefore, profits earned by one industry should not be confused with the economic impact of war on society as a whole.
A weapons manufacturer receiving a large contract may benefit financially while the country purchasing the weapons incurs substantial costs.
At the same time, civilians may bear costs that cannot easily be expressed in monetary terms.
What About Countries Restricting Arms Trade With Israel?
The social-media mentions Spain and Slovenia.
There is evidence for these examples, but the details matter.
Spain's foreign ministry stated in February 2024 that it had not authorized any arms-sale operation to Israel since October 7, 2023. (Ministry of Foreign Affairs)
Slovenia went further in July 2025, announcing a prohibition on the export and transit of military weapons and equipment to Israel and on imports from Israel, with specified exceptions. (Portal GOV.SI)
These are examples of governments adopting different policies toward arms transfers to Israel.
Other governments have maintained defense relationships with Israel.
This illustrates an important feature of international politics: countries can reach different conclusions about arms transfers based on their security policies, legal assessments, diplomatic relationships and domestic political circumstances.
A Fact Often Missed: Israel Is Also a Major Arms Importer
There is another side to the story.
Israel does not simply sell weapons to other countries—it also buys large quantities of major arms from abroad.
SIPRI estimates that Israel was the 14th-largest importer of major arms during 2021–25. The United States supplied approximately 68% of those imports, while Germany supplied about 31%. (SIPRI)
This means the international defense market is interconnected.
Israel can simultaneously be:
a weapons exporter and a weapons importer.
That is a useful fact for understanding the global military-industrial ecosystem.
What Can We Learn From This?
The most important lesson is not simply that “weapons companies make money.”
The bigger lesson is that modern warfare has created a highly interconnected international system.
Governments provide military budgets.
Defense companies develop technologies.
Universities and research institutions contribute scientific knowledge.
Factories manufacture equipment.
Financial institutions support companies.
Countries purchase weapons.
Armies deploy them.
And civilians ultimately experience the consequences when those weapons are used in conflict.
Understanding this chain helps us move beyond social-media slogans and examine the actual economics and politics of modern warfare.
Look Beyond the Headline
The claim that “war is a profitable business” contains an important economic question, but it is too broad to explain every war or every defense company.
The available evidence does show several important facts:
- Israel is now the 7th-largest supplier of major arms globally, according to SIPRI's 2021–25 data. (SIPRI)
- Israeli defense-export agreements reached $14.8 billion in 2024 and $19.2 billion in 2025, according to Israel's Ministry of Defense. (משרד הביטחון)
- India is a major destination for Israeli arms. (SIPRI)
- Major Israeli defense companies have reported substantial revenue and order-backlog growth. (Elbit Systems)
- The United States has provided Israel with extensive military assistance, including long-term FMF and additional post-October-2023 funding. (Congress.gov)
- Gaza has experienced extensive civilian suffering, destruction and displacement documented by the United Nations. (OCHA OPT)
- At the same time, claims that particular companies or governments deliberately create wars for profit require evidence beyond the existence of arms sales or increased company revenues.
The deeper question for readers is therefore not simply “Who makes money from war?”
It is:
How does the global arms system work, who pays for it, who supplies it, who buys it, and who ultimately bears its human and economic costs?
That is a question worth understanding—especially in an era when military technology, international politics and global business are increasingly connected.
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