Study on offset transactions: Higher research intensity, higher export volume and higher export dynamics

Bern, 21.11.2022 - Companies which have the chance to exercise offset transactions for arms procurement exhibit a higher research intensity, a higher export volume and higher export dynamics than the relevant comparable sectors in each case. This is shown by an independent study from BAK Economics. Between 2018 and 2021, around one billion Francs flowed into Swiss industry thanks to these transactions. The study also shows which data can be used to measure the achievement of offset goals and transform it into periodic monitoring. Based on these results, armasuisse is continuing to expand the digitalisation of its working tools and is adjusting its processes.

As regards foreign armament business, the manufacturers must compensate for part or all of the order volume with orders placed to Swiss companies. To test the efficiency of these offset transactions, armasuisse commissioned an impact analysis from the economics research institute BAK Economics. The analysis is used to check which data can be used to measure the economic impact of offset transactions and whether there are any indicators for achieving the offset goals. It comprises three modules: a data analysis of the companies benefiting from offset, a company survey of these companies and a technological analysis of Swiss industry.

Higher research intensity, export volume and export dynamics

According to the data analysis, altogether 616 offset transactions were carried out in the period under review between 2018 and 2021, in which 194 Swiss companies were involved. The entire order volume amounted to around one billion Swiss Francs. Around 8% of the order volume can be directly allocated to offset transactions, where the economic performance of the benefiting Swiss company was directly incorporated in the procured armaments. The majority (92%) of the offset volume is concerned with indirect offset transactions, including those in the form of industrial and research assignments, the transfer of technology and expertise, as well as marketing support.

The analysis of the individual companies shows that those firms which have the chance to exercise offset transactions exhibit a higher research intensity, a higher export volume and higher export dynamics than the comparable sectors. It is not possible to state whether this result can be causally attributed to the offset policy (or other factors) without the availability of additional data points. From an economic perspective, it could further be expected that a higher level of productivity and/or growth is also associated with higher research and export activity, for which, however, no consistent evidence could be found.

Companies consider offsets as important

According to the company survey, the second module of the study, the companies tend to estimate the relevance of offset transactions more highly, the more they are oriented towards such transactions (share of turnover). In addition, the positive benefits of offset transactions tend to be more pronounced in SMEs than in large companies. Specifically, almost every third company surveyed assessed offset transactions as important or fairly important with regard to access to security-relevant key technologies, gain of expertise in these technologies, strengthening of export capability and thus their competitiveness overall. The companies surveyed thus indicated that they achieved around 7% additional exports through offset, for example, (SMEs 8.5%; large companies 2.5%). 95 of a total of 194 companies benefiting from offset took part in the company survey.

Swiss industry well positioned in security-relevant technology

The analysis of the research performance in the area of security-relevant fields of technology, the third module in the study, came to the conclusion that Swiss industry is well positioned in the global technological contest. The analysis, carried out based on patent data, attests to the fact that Swiss industry focuses on cutting-edge research, as the share of top patents is significantly above average in all fields of technology. Almost every fourth patent developed by Swiss researchers (23%) is what is known as a world class patent. Switzerland is thus in first place with regard to the effectiveness of research. In the security-relevant fields of technology, the share of the total number of globally active patents is 0.4%, while for the world class patents it is 1%. This means that Swiss researchers were involved in the development of every hundredth active world class patent.

The evaluation of the data for the group of companies participating in offset transactions shows that the patent dynamic of these firms lies within the STIB average. The average increase in the patent portfolio in security-relevant technologies cumulatively amounts to 23% (STIB:24%) in companies participating in offset between 2017 and 2021. It is important to consider here that the innovation effect in SMEs frequently appears less in the form of patented knowledge.

Digitalisation for better controlling quality

The study by BAK Economics also contains proposals under which conditions more comprehensive evaluations of the offset tool would be possible in future and could be transformed into periodic monitoring. The optimisation of the data collection process as well as the collection of additional data at the companies benefiting from offset transactions are at the forefront in this respect.

With the IT project “Digitalisation offset reporting”, started in 2021, armasuisse is creating a web-based platform for the reporting and controlling, as well as the statistical recording and evaluation of offset transactions. Automated processes will improve the quality of offset controlling and reduce the expenditure in this regard. In addition, the strategic controlling has been included in the current version of the offset policy as the basis for periodic monitoring.

Address for enquiries

Jacqueline Stampfli
Deputy Head of Communications armasuisse
+41 58 464 60 42



General Secretariat DDPS