ABSTRACT
This chapter provides a liberal-rationalist theory of defence offsets, thus filling an important gap in the relevant literature. It does so by building on the insights of scholars of defence economics, international relations and security studies literature and, in particular, on Robert B. Putnam’s two-level game framework. After showing that defence offsets packages can be arranged hierarchically in a way that mirrors patterns of domestic arms production, this chapter delves into the actors involved in offsets negotiations and their interactions. More specifically, the chapter unpacks the black boxes of the buyer state and the foreign supplier, before then building on Putnam’s work to make sense of the strategic interactions of these actors – as well as the unavoidable need for them to strike a balance between domestic and international realms – and, therefore, offset outcomes. Finally, this chapter formulates a number of theoretical claims, both as loose propositions as well as necessary and sufficient conditions to explain cross-national variations in defence offsets. Obtained through deductive reasoning, such conditions and propositions will be systematically probed in the following chapters, first through Qualitative Comparative Analysis (QCA) and then through in-depth case studies.
