The United States and Saudi Arabia have the oldest and longest-standing defense relationship, entering an agreement of mutual defense assistance in 1951. Given this agreement and Saudi Arabia’s Western-made weaponry, U.S. defense companies have a significant role in the Kingdom’s defense sector. U.S. firms with a presence in the Kingdom – such as Lockheed Martin and Boeing – consistently rank among the top arms producing and defense services companies globally. Other top defense companies include Northrop Grumman, General Dynamics, BAE Systems, and Raytheon. There is an especially strong market for U.S. aircraft parts, and firms may increase their likelihood of procuring government contracts by first establishing a strong presence in the Kingdom. Defense spending remains a significant contributor to the United States economy, totaling nearly $600 billion on an annual basis and accounts for over 3 percent of GDP. The United States is the world’s top military spender, accounting for approximately 40 percent of global spending. Not only is the defense market vital for U.S. foreign trade, but it is also a key component of the U.S. economy, accounting for over 5 percent of U.S. manufacturing output. Our simulation results indicate that foreign military spending, as a result of the officially reported figure – $110 billion of military deals with Saudi Arabia, would create 782,000 U.S. jobs by 2025.
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