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Arms sales by the 100 biggest weapons makers in the world have declined in 2011, for the first time since 1994 as the global economic crisis prompted countries to reduce their defence budgets significantly.
The Stockholm International Peace Research Institute (SIPRI) said that total sales of these 100 companies, including inflation, declined by five percent from the previous year. Excluding inflation, the total spending on arms and military services declined to $410bn (€307bn, £265bn) from €412bn in 2010. The figures did not include the companies from China due lack of available data.
"Austerity policies and proposed and actual decreases in military expenditure as well as postponements in weapons programme procurement affected overall arms sales in North America and Western Europe," said SIPRI in a statement.
"The drawdowns in Iraq and Afghanistan and the sanctions on arms transfers to Libya also played a role".
While 60 percent of the total arms sales of the top 100 companies were contributed by the 44 US-based arms producers, 30 companies from Western Europe accounted for another 29 percent.
While the sector remains competitive amid increased austerity measures by economies, defence companies are pursuing a number of measures to stay alive in the market, SIPRI said.
"Companies are implementing strategies that accommodate the changes in threat perception since September 2001 while trying to maintain their bottom lines. We see this in the types of acquisitions being made and in the sectors companies are targeting," SIPRI arms industry expert Dr Susan Jackson said in a statement.
Additionally, some companies are pursuing military specialisation, while some others go for downsizing and diversification into adjacent markets.
SIPRI noted that arms companies are expanding into the cyber security market in line with the growing political and budgetary importance of it as a national security issue.
Defence companies based in the US dominated the top 100 list, with Lockheed Martin and Boeing claiming the first and second positions respectively. Britain's BAE systems claimed the third position while trans-European company EADS came in at the seventh place.