Stefan Markowski

On the normality and abnormality of offsets obligations

Defence offsets have often been described as government‐to‐business compensation arrangements or contracts involving “reciprocity beyond that associated with normal market exchange”. This paper argues that it is irrelevant and misleading to use this notion as a criterion for defining offsets. The paper also explores the apparent inconsistency between the maximising efficiency in defence procurement and the application of offsets requirements. It is shown that defence offsets are a subset of all the price‐quality‐quantity trade‐offs which in general characterise negotiations surrounding complex transactions. It is argued that although reciprocal or offsetting arrangements are a normal aspect of commercial transacting, the operation of certain offsets schemes namely mandatory offsets obligations, may inhibit the buyers flexibility in negotiating deals and result in inefficient procurement. This leads us to ask why these offsets schemes have persisted for so long.

The Attractiveness of Countries to Foreign Direct Investors

The present paper is concerned with the attractiveness of countries to direct foreign investments, that is, the host country characteristics that attract direct foreign investment (FDI). It focuses on two types of national characteristics —those that attract inflows of all foreign investment (intermediate products), including FDI, that is, mobility factors; and those that influence the modality of these inflows, that is, reflect the preference for FDI rather than other forms of foreign investment or ‘straight (unbundled) imports of intermediate products by indigenous firms (modality factors)’. The paper reports preliminary findings from a study of plausible determinants of FDI inflows into a sample of 25 countries.

Economic Growth and Demand for Military Expenditure in the Indo-Pacific Asia Region

Abstract In this paper, we use new data on military expenditure (milex) compiled by the Stockholm International Peace Research Institute (SIPRI) to investigate the relationship between military spending and economic growth. We focus on selected countries in Indo-Pacific Asia – an economically diverse but increasingly prosperous region with pockets of strategic competition and growing milex. We confirm the robustness of SIPRI’s milex data by corroborating it with defence budget data published by Australia’s Defence Intelligence Organisation (ADIO). We find no conclusive evidence of an arms race in the region. It is the growing economic prosperity that accounts for most of the growth in Indo-Pacific Asia’s milex. But we also find wide variations in the economic burden imposed by milex at the national level and that milex’ high level of aggregation masks important changes in national military capabilities. We argue that such capabilities can increase despite a constant or even declining milex burden and, hence, prejudice the peaceful resolution of international conflicts and, thus, undermine the fragile regional stability. We propose limited disaggregation of milex to highlight national spending on military force structure and preparedness so as to facilitate better understanding of military capability formation.

Big Science, Small Country And The Challenges Of Defence System Development: An Australian Case Study

This paper explores how a small economy, Australia, has sought to balance domestic military technologies with leveraging developments in the same area of research undertaken by the USA. Like many other small nations, Australia aspires to retain enough military sovereignty to pursue key national security interests independently of the superpower, if necessary. We have used Australia’s R&D support for the Jindalee over‐the‐horizon radar network to show how one small nation has attempted to strike a desired balance in its technological development with a view to maintaining the sovereign capacity to monitor its maritime approaches.

Country survey VI: Australia

Australia is a geographically large country, with the worlds longest national coastline to defend, but a relatively small economy of some 17.5 million people. Since World War II, Australia has faced the dilemma of how to structure defence policy in the absence of an identifiable threat. Its policy of self-reliance aims to permit Australia to conduct defensive operations in the event of low/medium level threats without depending immediately on its allies. This is to be achieved through the technological sophistication of defence equipment, a highly professional but small defence force and local industry support. The burden of defence, measured as the share of defence outlay in GDP declined from about 3% in 1971-72 to about 2.3% in 1993-94. It has been the Governments policy to encourage the development of local defence-related industry, in particular in areas such as: electronics/optics; communications and information technology; aerospace; shipbuilding and repair, munitions; and land vehicles. However, defence procurement has a small impact on the Australian economy as a whole.

MULTI‐CHANNEL SUPPLY CHAIN FOR ILLICIT SMALL ARMS

To generate effective policy to reduce the proliferation of illicit small arms in developing countries, governments must understand how the weapons are distributed and illegal stockpiles formed. This paper describes the structural characteristics of small arms supply chains and models mechanisms delivering the weapons to illicit users. The paper draws on the experience of countries in Southeast Asia and the Pacific Melanesian states. By pointing to the structural complexity of small arms supply chains, it highlights challenges that multiple channels of supply pose for governments seeking to curb the flow of small arms into illicit stocks.

Globalisation, immigration and multiculturalism – the European and Australian experiences

Australian multiculturalism – an integrative policy strategy aiming at managing cultural diversity – was adopted as government policy in Australia in the 1970s. In its original rendition, Australian multiculturalism was embedded in classical sociological theory, integrative, reciprocal, egalitarian and respectful of the majority. However, it has also been confused with ethnic pluralism and assimilationist ‘melting pot’ approaches, and these confusions are apparent in the recent European and domestic criticisms. The article outlines the principles of Australian multiculturalism, identifies its theoretical foundations, and highlights some of the popular confusions about its meaning, focus and objectives.

The Impact of Microelectronics on Scale in Manufacturing Industries

The traditional treatment of economies of scale ignores the complexity of manufacturing processes and is inadequate for an analysis of the impact of technological change. Complexity in manufacturing processes results, inter alia, from the multi-product capabilities of production facilities and the need to control the production of several outputs. This aspect of production activity must be addressed if the economics of diffusion of microelectronics-based technologies is to be studied. This paper examines the sensitivity of cost functions to changes in the characteristics and utilisation of production facilities and discusses the impact of microelectronics on scale, scope and scheduling flexibility of manufacturing facilities.

Intra- vs. extra-regional migration in the post-Soviet space

The paper addresses the distinctiveness of migration flows in the post-Soviet space east of the European Union: the Commonwealth of Independent States (CIS) and Georgia. Population mobility within this region is hypothesized to differ from extra-regional population movements due to the common institutional past of these states, all of which were once the USSR republics. It has been claimed that CIS countries form a distinct post-Soviet migration system. Within the framework of the migration systems theory, this paper offers a quantitative analysis of the scale and mechanics of cross-border population mobility in the region. By means of network analysis, it examines the intensity and distinctiveness of intra-regional migration flows relative to those between the region and third countries. We have also used an econometric gravity model to identify the main drivers of migration flows in the region. The resultant findings show that the existence of the post-Soviet migration system is questionable and should not be treated axiomatically. This is because the mobility of people from and to the CIS region is relatively high, and the region is increasingly integrated into the international division of labor through trade and capital mobility. The cross-border mobility of people also reflects this globalization trend.

Defence R&D and the Management of Australia's Defence Technology

Technological innovation for defence-related purposes has often facilitated major advances of socio-economic significance well beyond the defence sector. In the post-Cold War era, government spending on military research and development (R&D) is falling around the world but for Australia, the changing strategic environment presents challenges which imply there may be substantial benefits from maintaining existing, modest levels of domestic R&D effort This paper examines the policy drivers in this area, embedding analysis of defence R&D spending in the broader processes of procuring R&D-intensive, hi-tech weapons systems. It concludes that if Australia is to reduce the inefficiencies often associated with defence procurement, it may need to have a core of defence-dedicated R&D undertaken by government itself.