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Arms Trade Offsets and Development

Author

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  • Jurgen Brauer

    () (Augusta State University)

  • J Paul Dunne

    () (School of Economics, University of the West of England)

Abstract

Offsets, arrangements that obligate the arms seller to reinvest (“offset”) arms sales proceeds in the purchasing country, are an increasingly important facet of the international trade in arms. They are used to justify spending on imports by promises that there will be significant benefits to the economy, through the promotion and development of local industry, technology and employment. Until recently, however, there has been little research on how well offsets work in practice. This paper is a ‘state-of-the-art’ review of our empirical knowledge regarding arms trade offsets. We find virtually no case where offset arrangements have yielded unambiguous net benefits for a country’s economic development. As a general rule arms trade offset deals are more costly than ‘off-the-shelf’ arms purchases, create little by way of new or sustainable employment, do not appear to contribute in any substantive way to general economic development, and with very few exceptions do not result in significant technology transfers, not even within the military sector.

Suggested Citation

  • Jurgen Brauer & J Paul Dunne, 2005. "Arms Trade Offsets and Development," Working Papers 0504, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  • Handle: RePEc:uwe:wpaper:0504
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    File URL: http://carecon.org.uk/DPs/0504.pdf
    File Function: First version, 2005
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    References listed on IDEAS

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    1. Peter Batchelor & Paul Dunne, 2000. "Industrial participation, investment and growth: The case of South Africa's defence-related industry," Development Southern Africa, Taylor & Francis Journals, vol. 17(3), pages 417-435.
    2. Dunne, J. Paul, 1995. "The defense industrial base," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 14, pages 399-430 Elsevier.
    3. Dunne, Paul, 1990. "The Political Economy of Military Expenditure: An Introduction," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 395-404, December.
    4. Brauer, Jurgen, 2007. "Arms Industries, Arms Trade, and Developing Countries," Handbook of Defense Economics, Elsevier.
    5. Jurgen Brauer, 2000. "Potential and actual arms production: Implications for the arms trade debate," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(3), pages 461-480.
    6. Hartley, Keith, 1995. "Industrial policies in the defense sector," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 16, pages 459-489 Elsevier.
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    Cited by:

    1. Paul Dunne & Richard Haines, 2005. "Transformation or Stagnation? The South African Defence Industry in the early 21st Century," Working Papers 0514, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    2. Larrú, José María, 2013. "The developmental contribution of the Offset Agreements: the case of Colombia," MPRA Paper 51456, University Library of Munich, Germany.

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