Study on the Dominant Factors Affecting Defense Trade

This study focuses on the analysis of the dominant factors affecting the trade of strategic materials between countries. In particular, It has attempted to verify our trade patterns over the past 20 years by correlating economic variables such as geographic distance, GDP size, security variables such as alliance, democratic level, policy similarity, and trade volume between countries. As a result of the analysis, strategic materials trade tended to prefer transactions with countries with close distances and large GDP in order to reduce transaction costs from an economic perspective. From a security point of view, trade with countries with similar foreign policies tends to take place mainly, and trade with countries with military alliances decreased. On the other hand, there was no significant correlation with the level of democracy. The results of this empirical analysis suggest several topics for our defense policy in the future from the perspective of export control. First, a balanced policy approach between economy and security is needed when exporting strategic materials, and second, it is necessary to establish a continuous monitoring system for end-users. Third, it is necessary to systematically review the factors considered from the security point of view when permitting exports of major items.