The spectacle of American-, French-, West German- and Israeli-made weapons' being used against British forces in the South Atlantic is a vivid reminder that the production of conventional arms is the world's leading growth industry. During the last decade, the yearly volume of transfers of these arms to other countries more than doubled. The fraction going to Third World nations nearly tripled.

There was an even more dramatic shift in the kinds of weapons being transferred. As the 1970s opened, arms sales and grants were largely of surplus or obsolete weapons. As the decade closed, the most sophisticated weapons rolling off production lines were being transferred, sometimes even before being deployed in the seller's own forces; in only one region, Latin America, were all suppliers exercising a measure of technological restraint. That barrier fell this year when the Reagan administration decided to sell F16s to Venezuela--the first advanced supersonic fighters to be sold on the continent.

Arms sellers perennially hope to gain political favor in return for their wares. But as the Russians discovered in Egypt, China, Somalia and elsewhere, and as this country learned in Iran, such relationships are unpredictable. When one supplier ends up supplying rival countries, frequently the result is greater friction with both.

The expectation of gaining leverage over recipients' policies has also generally been frustrated. More often, the recipient seems to hold the upper hand: it can threaten to buy elsewhere or brand a reluctant supplier as unreliable. Third World nations with the means buy from as many nations as possible. The ultimate refinement of this tactic is to split purchases between communist and non-communist suppliers, as India and Iraq have done.

When fighting breaks out, suppliers' problems multiply. With so many countries selling to so many recipients, it is impossible to predict against whom a weapon will eventually be fired. With an especially effective weapon--like the French Exocet missile that the Argentines have battle-tested--this can prove embarrassing, at the least. The choice of whether to continue arms deliveries during a conflict forces a supplier into taking sides when its political interests may require staying neutral.

Presenting the Reagan administration's new arms transfer policy last year, Undersecretary of State James Buckley described the principal purpose of arms transfers as "not to help a particular regime but to buttress our own security" through the global projection of American power. He stressed that the policy would steer a "prudent, middle course" and dismissed projections of large increases in military sales as "simply unfounded." Sales in 1982, he predicted, "would remain approximately where they are today, namely at the $15 billion level."

As it turns out, the Pentagon now predicts that foreign military sales in 1982 will reach $25 billion. Allowing for the usual underestimate, and including grant aid and commercial sales, the total could top $30 billion. Yet even that amount--way above the previous high of $17.7 billion--is apparently not enough. National Security Adviser William Clark recently called for "some steady growth" in security assistance. He pictured American arms in foreign hands as "a real complement to our own force structure" and outlined a "priority effort" to accelerate the sales process and remove congressional restrictions on it.

Accelerated U.S. sales may well be matched, if not exceeded, by the Soviet Union and by other Western suppliers. Fancy, sophisticated arms don't cause wars. But they can make them more probable and also greatly more destructive. They cost vast amounts of money--more than enough to stifle economic development in poor countries. Presumably, there is a breaking point somewhere.