South Korea's arms industry accounted for 2.2 percent of global top 100 producers' sales in 2016, the Stockholm International Peace Research Institute (SIPRI) said in a report listing the world's "top 100" military services.
South Korean arms-producing companies' combined sales totalled $8.4 billion (7.1 billion euros) the same year with a 20.6 percent rise in sales compared to 2015, SIPRI added.
"The increasing nuclear weapons capability in North Korea has led to major investments in South Korea," SIPRI Senior Researcher Pieter Wezeman told AFP.
In defiance of repeated international condemnations and sanctions, Pyongyang fired an intercontinental ballistic missile (ICBM) last week, which reached an altitude of 4,475 kilometres (2,780 miles) before splashing into the sea 950 kilometres (590 miles) east of its launch site, North Korean state media said.
The North, which says it needs nuclear weapons to protect itself from "hostile" US forces, has vowed to accelerate its weapons programmes in response to "evil" sanctions imposed by the UN Security Council.
Once a mainly agricultural backwater devastated by war, South Korea has been one of the world's largest importers of military equipment and technology for decades -- mostly from the US -- but in recent years its domestic sector has grown rapidly.
In the face of North Korean threats, the proportion of government spending that Seoul devotes to defence is among the world's highest outside Middle East and African conflict zones, according to SIPRI's 2016 figures.
South Korea is turning "to its own arms industry to supply its demand for weapons" and "aiming to realise its goal of becoming a major arms exporter", SIPRI Senior Researcher Siemon Wezeman said in a statement.
Having gone through a massive industrial development, South Korea is "increasingly using weapons and technology that can compete with what has been supplied by Europe and the US," according to Pieter Wezeman.
The nation is a top arms producer among emerging countries in the sector, including Brazil, India and Turkey.
South Korean arms exports, which amounted to $253 million (215 million euros) in 2006, reached $2.5 billion (2.12 billion euros) ten years later, according to official data.
Its missiles, howitzers, submarines and warplanes are particularly popular in Southeast Asia, Eastern Europe and South America.
Seven South Korean arms groups rank among SIPRI's top 100 global arms producers. The first of these, the conglomerate Korea Aerospace Industries (KAI), which developed a supersonic training hunter T-50 Golden Eagle with the American Lockheed Martin, is in 48th place.
The top 100 producers' combined sales totalled $374.8 billion (320 billion euros) last year, up 1.9 percent from 2015. This is the first annual increase after a five-year consecutive decline.
American producers alone accounted for 57.9 percent of the total sales figure ahead of the British (9.6 percent), the Russian (7.1 percent) and the French (5.0 percent).
US companies' arms sales grew by four percent in 2016 at a combined total of $217.2 billion (185 billion euros) and Germany saw a 6.6 percent rise in arms sales for the same year due to demands in Europe, the Middle East, and South East Asia.
SIPRI said growth in arms sales was triggered by "ongoing military operations in several countries and persistent regional tensions that are leading to an increased demand for weapons."
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