The offsets program in the United Arab Emirates.
Middle East Policy – January 1, 1997
Amin Badr El-Din
The mission of the UAE offsets program is to create wealth-generating opportunities for the private sector. In the 1960s, industrial-cooperation mechanisms were introduced between industrialized and developing countries in order to allow the developing country to recoup some of the economic benefits they were losing as a result of sizable and necessary public-sector expenditures on foreign products, services and advanced technology. Such mechanisms are. referred to as offsets.
Direct offsets are coproduction or buy-back agreements directly related to the procurement itself. Indirect offsets involve projects or ventures in industries different from that of the specific procurement, for example, when a supplier of aircraft undertakes to form a joint-venture in the buyer country to service power-plant turbines. Output-based offsets such as the UAE offsets program are tied to the financial gains made by joint-venture projects.
Offsets programs are usually applied within the context of an overall national economic strategy. For instance, most Southeast Asian countries require offsets in the form of technology transfers or licensing to encourage foreigners to develop an industrial base in those countries. In Western Europe, the emphasis is on maintaining the home industrial and employment base by entering into in-country, coproduction deals with the foreign seller. In the former communist-bloc countries, barter was used to save and acquire hard currency. Click the link below to view full article: