The Economic Evolution of the Romanian Defense Market in the Context of the World Crisis (Post-pandemic) and the Imbalance of International Security (Military Conflict in Ukraine)

Abstract

Abstract The analysis of crisis management shows that any crisis will generate risks and opportunities for certain industrial sectors. The current security crisis overlaps today with other crises (climatic, economic, energy, and medical crises generated by COVID-19). The medical crisis generated by the COVID-19 pandemic has recorded considerable profits for the pharmaceutical industry and companies in the medical equipment manufacturing industry. (John A. Parnel). The defense market and armaments production industry has been steadily growing at national and international levels due to the imbalance in international security caused by Russia's military conflict. An economical inside perspective is provided due to an internal study case based on the evolution of this industry's key sector. As per the analyzed data, the market demand is currently higher than the production capacity, both at European and national levels. The industry cannot meet the requirements of the defense market. Nonetheless, the turnover of the profile companies experienced significant increases with positive effects on the recorded profit rates. After conducting a thorough evaluation of the domestic defense industry, the solution might be to privatize state-owned companies in the security industry, which may involve merging companies with similar activity profiles. Also, financial incentives, such as tax measures like those granted to personnel working in the IT industry, can help overcome the human resources issue that the Romanian defense industry is currently facing.