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Technology offsets, a nonconventional international trade-financing tool, is used by governments (buyers) to obtain industrial and technological benefits from companies (sellers) as part of international procurement. Offsets deals involve billions of dollars and this practice exists in around 80 countries around the world. Though offsets is a popular practice in defence, it is increasingly gaining popularity in civil sectors. Offsets is often tainted by controversy and receives bad press. What then makes offsets popular? Governments claim that offsets delivers technology and knowledge transfer, skills in high technology sectors and employment, and offsets expands export opportunities through participation in OEM supply chains. For companies, offsets is mainly employed as a tool to obtain a competitive edge and win sales in international business. In the past, there have been mixed results of case studies on the impact of offsets successes and failures.Considering the mismanagement of globalisation, unfair trade agreements and current political and economic discontent, there is a stronger need for governments and companies to use vehicles such as offsets to create a relationship of trust and commitment for sustainable development. This book fills the gap in offsets and focuses on how to manage offsets more effectively by addressing issues of strategy, policy and implementation, technology management, governance and risk.Technology Offsets in International Defence Procurement is designed for those studying international procurement, international trade, international business, technology management, defence policy and industrial policy. This book will also be of interest to practitioners and policy makers in both government and industry.

Reviews

'This is an insightful and knowledgeable piece of academic work from one of the foremost experts in the fiendishly complex subject of global offset and countertrade matters, and adds considerably to the currently poorly-served body of work available to researchers on this subject. The author is uniquely qualified to be able to present an accurate picture of this increasingly important, but little-understood and often erroneously portrayed subject, and present accurately the views and opinions from both the viewpoints of the Government "Offset Tsars" to set and police their national offset and countertrade policies, and also of the multinational companies who have to seek to try to comply with these regulations.' - Brinley Salzmann, Director - Overseas & Exports, ADS

'Defence and civil offset is often described as a black art, marked by controversy and contradiction. It is legal, but anti-competitive; governed by policy, but opaque; a catalyst for industrial and technological development, but cost-enhancing and offering only limited and temporary additions of capacity and capability. Dr Balakrishnan is to be applauded for cutting through this confusion, and de-mystifying the subject. Her book offers practitioners and interested observers alike an overdue practical guide to simplifying the complexities of defence offset.' - Ron Matthews: Chair, Defence Economics, Cranfield University, United Kingdom

List of figures
viii
List of tables
ix
Foreword x
Acknowledgements xi
List of abbreviations
xiii
PHASE I
1(58)
1 An introduction to offsets
3(17)
1.1 Setting the scene
3(2)
1.2 Why the need for this book?
5(1)
1.3 Global offsets obligation and trends
6(2)
1.4 Offsets in international procurement
8(1)
1.5 Key research on offsets
9(1)
1.6 Costs and benefits of offsets
9(2)
1.7 Offsets stakeholders and their views
11(4)
1.8 The need for an offsets framework
15(1)
1.9 Structure of the book
16(4)
2 Key aspects to offsets management
20(25)
2.1 Background
20(1)
2.2 Nonconventional International Trade Financing (NITF)
20(15)
2.3 How have offsets projects evolved?
35(1)
2.4 Origins of offsets
36(1)
2.5 Understanding offsets terminologies
37(6)
2.6 Offsets case study: use of offsets multipliers
43(2)
3 Theoretical underpinning to the study of offsets
45(14)
3.1 Introduction
45(1)
3.2 Technological self-sufficiency leading to independence in defence and security
46(2)
3.3 Industrialisation, or take-off
48(2)
3.4 Reducing the technological gap
50(2)
3.5 Building dynamic capability
52(1)
3.6 Industrialisation through clusters
53(1)
3.7 Sustainingfirm competitiveness through technological absorption capability (TAC)
54(5)
PHASE II
59(40)
4 Role of government: offsets strategy and policy formulation: development phase
61(11)
4.1 Background
61(1)
4.2 Role of offsets in international defence procurement
61(2)
4.3 The offsets management cycle (OMC)
63(1)
4.4 Offsets strategy development
64(2)
4.5 Offsets policy formulation
66(1)
4.6 Responsibilities for offsets policy formulation
67(1)
4.7 Determining offsets objectives
67(2)
4.8 Identifying stakeholders
69(3)
5 Role of government in offsets implementation: pre-, during and post-contract phase
72(15)
5.1 Background
72(1)
5.2 Role of offsets management authority (OMO)
72(2)
5.3 Offsets implementation process
74(10)
5.4 Common issues in offsets implementation
84(3)
6 Sellers' offsets strategy and implementation
87(12)
6.1 Background
87(1)
6.2 Sellers `perception of offsets'
87(2)
6.3 Essential features of offsets in a company
89(2)
6.4 Sellers `offsets management life cycle'
91(2)
6.5 Five forces that influences sellers `successful offsets strategy and delivery'
93(3)
6.6 Issues to consider for sellers when managing offsets
96(3)
PHASE III
99(46)
7 Technology, competitiveness and offsets valuation
101(19)
7.1 Background
101(1)
7.2 Defining technology
101(5)
7.3 Elements of transfer of technology in offsets (TOT)
106(2)
7.4 Technology acquisition and offsets - justification for national competitiveness
108(2)
7.5 Technology valuation, process and approach
110(4)
7.6 Critical factors for successful transfer of technology through offsets
114(1)
7.7 Case study
115(5)
8 Transparency in offsets
120(9)
8.1 Is offsets a corrupt practice?
120(1)
8.2 What does Transparency International (TI) say about offsets?
121(1)
8.3 Possible malpractice in offsets dealings
122(1)
8.4 Defence sales and allegations of corrupt practice in offsets
123(1)
8.5 Recommendation on best practices for greater offsets transparency
124(5)
9 Managing offsets risks
129(10)
9.1 Awareness to risk in offsets
129(1)
9.2 Evaluating risks in offsets management life cycle: buyer perspective (offsets obligee)
129(5)
9.3 Evaluating risks in offsets management life cycle: seller perspective (offsets obligor)
134(3)
9.4 Case study
137(2)
10 Conclusion and future of offsets
139(6)
10.1 Offsets is here to stay
139(1)
10.2 Future of offsets
139(6)
References 145(27)
Glossary 172(2)
Index 174
Kogila Balakrishnan is currently the Director for Client and Business Development (East Asia) at WMG, University of Warwick. She began her career in the Malaysian civil service where she was instrumental in the development of national offsets policy and subsequently retired as the Under Secretary for Defence Industry in 2016. Kogila holds an BA (Hons) from University of Malaya, LLB (Hons) degree from the University of London and an MA in Strategy and Diplomacy from the Malaysian National University. She won a Fulbright Scholarship in 2003 and held a Chevening Scholarship during 20042007, when she obtained her PhD in offsets and technology policy from the Defence College of Management and Technology, Cranfield University, UK Defence Academy. She presently holds an Adjunct Professorship at the Malaysian National Defence University and continues to advise governments and organisations on offsets policy. Kogila is married and has three wonderful children.