Abstract
ABSTRACT The workhorse of military alliances theory is the joint products model where the prominent existence of private benefits from alliance activities alleviates the free-riding problem. In the case of NORAD Modernization project, there are potentially large private economic benefits accruing to Canada. These benefits may include technology transfers and domestically produced inputs from some sectors exhibiting comparative advantage. In this latter case, the benefits will largely depend on whether a JSF type consortium will undertake the investments efficiently as opposed to the so-called benefits obtainable from Canada’s fundamentally inefficient offsets program, Industrial and Technological Benefits (ITB). The article focuses on Canada’s Key Industrial Capabilities (KIC), the 17 sectors officially selected as supporting the country’s operational capabilities. The width of this selection as well as the procurement and industrial policy interaction are briefly discussed.
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