Ukraine's defense industry gets a second chance

Key Points:

• Ukraine inherited the Soviet Union's second-largest defense industrial complex in 1991, but much of that capacity vanished by 2014, leaving volunteers to support the military during Russia's first invasion.
• Today, Ukraine is rebuilding its defense industry from the ground up with private investment, open competition, and rigorous quality control, with private companies now accounting for up to 90% of drone production.
• The future of Ukraine's defense sector hinges on critical choices, including fostering technology spillover into the civilian economy, maintaining openness to exports and international partnerships, encouraging competition over consolidation, focusing on specialization rather than trying to do everything, and integrating defense with broader industrial policy.
• Successful defense industries in countries like the US, Israel, and South Korea demonstrate the benefits of openness, innovation, and civilian spillover, while Ukraine risks repeating the Soviet-era pitfalls of isolation and over-centralization if it does not navigate these structural decisions carefully.
• Ukraine’s defense industry has the potential to become a foundational element of the country's economy and technological advancement, but this requires building institutions, standards, and infrastructure to support sustainable growth and global integration.