Defense offsets and regional development in South Africa

A bridge too far? The arms deal, the Coega IDZ, and economic development in the Eastern Cape

“…There is little in the way of linked and targeted sets of investments in either the NMM local economy or the Eastern Cape more generally -a pattern echoed elsewhere in South Africa (Dunne & Lamb, 2004;Haines, 2004Haines, , 2005. The original idea that the Coega IDZ would link directly with the motor manufacturers in the province through attracting them to the zone, providing galvanised and specialty auto steel at competitive prices, and exploring other linkages in the motor industry cluster, seems to have dissipated somewhat.…”

“…This soon grew to R33 bn because aspects of the loan agreement had not been included in this amount. By the early 21 st century, the costs of the SDP had climbed to over R50 bn (Haines, 2004).…”

“…Fortuitously for the CDC, the French company Aluminum Pechiney came to their rescue with a proposal to build, invest in and run a new $1 ,6 billion aluminum smelter in the Coega IDZ. Amongst many other incentives, the DTI offered offset credits acquired through arms purchases, to increase the appeal of the proposed deal (Haines, 2004).…”

“…The work is essentially out-sourced component production, with little or no technology transfer (Dunne & Haines, 200 I , 2002). DI P work is also being carried out for Agusta in terms of fixturing work for the rear fuselage of the Agusta helicopter (Haines, 2004).…”

“…Until recently there was surprisingly little critical academic research on the implementation and effects of defence ~ changed somewhat with a compact but growing body of compaltat~vi:¥'iirid~o~~lsP~~ific studies on the subject (Matthews, Downloaded by [Selcuk Universitesi] at 16:43 20 December 2014Brauer & Dunne, 2004Haines, 2004;Hagelin 2004;Warwar. 2004).…”