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Country Industry Forecast - The South Korean Aerospace & Defense Industry
Persistent threats from North Korea have compelled the South Korean Government to allocate vast amounts of resources toward developing a stable aerospace and defense industry. In addition to the urgent need for a self-reliant defense capability, modernization of infrastructure and strong economic performance are other drivers of the industry. The key objective of the Ministry of National Defense is to maximize indigenous production, diversify defense suppliers, strengthen air and space power, and acquire sophisticated technology. Given the rapid pace of developments, South Korea is poised to become the world's eighth largest aerospace industry by 2015.
South Korea, which is the third largest economy in Asia and the 11th largest in the world, is expected to be a major contributor to the growth of the aerospace and defense industry in Asia. Not only is the country a favorite investment destination for new and upcoming technologies, but it also houses some of the world's major corporations such as LG Electronics and Samsung.
South Korea is now witnessing a stable democracy under the leadership of the Uri Party head, Roh Moo-Hyun. However, the changing political scenario including the withdrawal of American troops brings in new challenges that are going to prove difficult to handle since the country is still dealing with political pressure from pro-nuclear North Korea. President Roh also faces the mammoth task of rejuvenating a troubled South Korean economy recovering from the aftermath of a credit card crisis in 2003. Given the drastic fall in private consumption, recovery from the current slowdown is not expected to happen in the near future.
Despite predictions of a slow economic revival, South Korea can still leverage its reputation as an export oriented economy and its proximity to growing markets such as China and India. South Korea also stands to benefit greatly from its relationship with Japan. In fact, there are hopes to expand trade opportunities, and South Korea is currently negotiating trade agreements with Japan and Singapore. The first free trade agreement with Chile came into effect in 2004.