Tax Havens and the Production of Offshore FDI: An Empirical Analysis
University of Oxford, School of Geography and the Environment Working Papers in Employment, Work and Finance, No. 13-02
24 Pages Posted: 17 Apr 2013 Last revised: 6 Sep 2013
Date Written: April 17, 2013
While most research on FDI focuses on the ‘real’ economy, at least 30% of global FDI stock is intermediated through tax havens. Using 2010 IMF data on FDI stocks, this paper sheds new light on geographical, historical, and political determinants of offshore FDI. Despite its intangibility, offshore FDI is as sensitive to physical distance as real FDI. Offshore FDI links are particularly strong between colonial powers and their current and former colonies. The OECD, while officially leading an agenda against tax evasion, internalizes significant offshore FDI within its membership. Indeed, offshore FDI is pervasive, affecting wealthy economies as much as developing countries.
Keywords: FDI, tax havens, offshore financial centres, gravity model
JEL Classification: F23, F65, G15, H26
Suggested Citation: Suggested Citation