Defence industrial development and self-sufficiency: offset effectiveness in Spain
Gonzalez Lozano Alma Arcelia
Date of Issue2014
S. Rajaratnam School of International Studies
The dynamics of the international arms trade system are significantly influenced by the practice of defence offsetting. Defence offset is a form of countertrade whereby states maximise on defence expenditure by requesting foreign suppliers to undertake industrial and commercial transactions in the domestic economy as a condition to award a procurement contract. This practice enables the demand side to deliberately distort trade patterns and generate economic activity for local industry. Defence offset is therefore widely employed by governments in both developed and developing countries as an instrument to achieve technological and industrial development in sectors of strategic importance. This study examines the extent to which offset is effective in meeting defence industrial development objectives. The research focuses on the case study of Spain as a country that has systematically employed offset since the early 1980s. The study conceptualises offset in the context of the contemporary international trade system and determines whether it works as intended through the assessment of three sectoral case studies. Empirical evidence was gathered through fieldwork research involving surveys and interviews with key corporate and government stakeholders representing the demand and supply sides. The analysis takes the form of a process-tracing narrative and concludes with a validation of the conceptual model.
DRNTU::Business::International business::International trade