Employment Creation Potential of the Turkish Defense Industry: An Analysis with the Input-Output Model

Abstract

Purpose – The aim of this study is to empirically examine the effects of the Turkish defense industry on production and employment within the framework of input-output analysis. Methodology – The study employs 2023 Turkish Statistical Institute (TUIK) input-output tables and employment data. Narrow and broad proxy structures representing the defense industry were constructed by using the sectors C25, C26, C27, C28, and C30. Within the scope of the analysis, a 1 billion TL final demand shock was applied, and production and employment multipliers were calculated through the Leontief inverse matrix framework.

Results – The findings reveal that the broadly defined defense industry generates a total of 1,047 jobs under a 1 billion TL final demand increase, approximately 58% of which arise through indirect channels. In addition, the sector's production multiplier was estimated at 2.80, indicating a strong capacity to stimulate output throughout the economy.

Discussion – These results suggest that the Turkish defense industry is not only a direct producer of goods and services but also a significant employment engine through backward linkages with supplier industries. The high share of indirect employment demonstrates the importance of the sector's domestic supply chain integration. Therefore, policies supporting localization, technological upgrading, and industrial clustering in defense production may contribute substantially to sustainable growth, industrial transformation, and employment creation in Türkiye.