ABSTRACT
Spain has significantly downsized its defense industry in the 1990s with mixed results in moving workers and facilities into civil sector activities. In the 1980s, the electronic and aerospace sectors enjoyed the support of governmental policies, which targeted them as engines for Spanish re-industrialization. As a result, they managed to advance their technological capability and became more competitive in the production of subsystems for the international market. Improvement in technological capability, specialization in subsystems, and internationalization have also benefited civil production in these sectors, and now accounts for more than 50 percent of total sales. In contrast, the naval, armament, and ammunition sectors have not been able to adapt to the new defense environment. Both sectors have gone through a deep production crisis while remaining totally dependent on defense markets.
