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Offsets in practice: The experience of South Africa

Author

Listed:
  • Paul Holden

    (Shadow World Investigations, London, United Kingdom.)

Abstract

Numerous countries require that defense manufacturers commit to substantial offsets when defense materiel is purchased. However, there is extremely limited data regarding the economic efficacy or rationality of offsets. Recent disclosures related to South Africa’s controversial 1999 “Arms Deal” about the economic performance of its sizeable offset obligations provides solid evidence that the manipulation of offset scoring systems allowed defense manufacturers to invest far less than originally contracted. The South African experience indicates that there are likely to be structural features inherent in all civilian offsets flowing from defense contracts that exert a downward pressure on the actual economic investments delivered by defense manufacturers.

Suggested Citation

  • Paul Holden, 2020. "Offsets in practice: The experience of South Africa," Economics of Peace and Security Journal, EPS Publishing, vol. 15(1), pages 20-30, April.
  • Handle: RePEc:epc:journl:v:15:y:2020:i:1:p:20-30
    DOI: 10.15355/epsj.15.1.20
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    File URL: https://www.epsjournal.org.uk/index.php/EPSJ/article/view/328
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    More about this item

    Keywords

    Offsets; economics; defense; South Africa; corruption;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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