BAE Systems, a British firm, took the top spot as the world's largest arms manufacturer in 2008. This is largely because the company has pursued a strategy of expanding the American side of its business in recent years. The next five places and most of the top 20 are made up of American firms that specialise in selling arms or have a defence division. America's huge defence budget—it should reach some $700 billion in 2010—provides an inviting target for the country's home-grown defence industry.

BAE Systems