Report Summary
This Quwa Premium report (now a freely accessible resource) examines the viability of commercial offsets (tied to big-ticket defence purchases) in Pakistan. In this report, we briefly review the checkered history of offset packages, especially in the developing world. However, in contrast to many economic discussions of offsets – which assessed viability of such deals against the buyer and seller’s claims of development and savings – we benchmark offsets against resource optimization.
Unlike many countries, Pakistan’s defence or security establishment seldom requires public approval (in the mainstream democratic sense) to push defence purchases, but rather, they are constrained by fiscal resources. In effect, the discussion of offsets would, at least partly, revolve on the subject of return-on-investment (ROI) in that the results of offsets – such as new manufacturing entities, supply-chain contracts, foreign direct investment (FDI) or partnerships – must, ideally, reverse those constraints.
In other words, the purported economic benefits of offsets would have to be realized in order to fulfill the Armed Forces of Pakistan’s own strategic objectives, i.e. to secure long-term funding mechanisms to support ongoing and future big-ticket procurement.
Introduction
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