Where Governance Fails: Advanced Business Services and the Offshore World
22 Pages Posted: 15 Sep 2011
Date Written: September 15, 2011
Abstract
Twenty years ago the Soviet Union was dismantled and the Cold War ended. With enlarged markets and peaceful economic co-operation the world seemed to be embarking on a path of uninterrupted development. In reality, however, we experienced two worst decades in the post WWII history in terms of world GDP growth rate, combined with the highest levels of domestic income inequalities, economic instability, and the highest greenhouse gas emissions. The 2000s was the worst decade on all of these counts, the 1990s the second worst. Why did the world economy perform so badly? The paper revisits some key concepts used in economic and social sciences to explain economic transformations of the last 20-40 years, and points to the development of the advanced business services – offshore world nexus as an area of major governance failure. Advanced business services hold considerable power, which they exercise by operating legal and financial vehicles designed to escape the control of governmental or inter-governmental organizations through the use of offshore jurisdictions. This nexus of advanced business services and the offshore world contributed to the recent global financial crisis, and has negative consequences for stability, equity and sustainability.
Keywords: governance, advanced business services, offshore jurisdictions, world cities, finance, investment vehicles, flexible accumulation
JEL Classification: G30, F30
Suggested Citation: Suggested Citation
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