This research focuses on understanding the defense industry of Sweden and the Republic of Korea (ROK), two middle powers renowned for advanced technology and weapon self-sufficiency. Previous studies have not explained why Sweden and Korea are competitive in the defense industry. This research aims to answer the question: What determinant factors have made ROK and Sweden to develop competitive defense industries on their own with sophisticated technology? The study seeks to enrich our understanding of the defense industry in Sweden and the ROK. Utilizing a case study approach, this research closely examines the specific contexts influencing the defense industries of these countries. The key findings are that Sweden needs to strike a balance by expanding government-led arms production facilities. In contrast, ROK needs to cooperate more actively with its allies, including the U.S. This thesis contributes by presenting future development directions based on the results.