Offshore Jurisdictions (Including Cyprus), Corruption Money Laundering and Russian Round-Trip Investment

29 Pages Posted: 4 May 2013 Last revised: 21 Jun 2023

See all articles by Svetlana Ledyaeva

Svetlana Ledyaeva

University of Joensuu - Department of Economics and Business

Päivi Karhunen

Aalto University - Department of Economics

John Whalley

University of Western Ontario - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for International Governance and Innovation (CIGI)

Date Written: May 2013

Abstract

In this paper we analyze the link between corruption money laundering and round-trip investment via offshore jurisdictions utilizing Russian firm-level data. In particular we empirically explore location strategies of round-trip investors (namely, from Cyprus and British Virgin Islands) across Russia and compare them with the benchmark group of genuine foreign investors in Russia. We further study the determinants of the fraction of round-trip investment in total foreign investment in Russian regions. We find that round-trip investors tend to locate in more corrupt Russian regions than their genuine foreign counterparts and the fraction of round-trip investment is also significantly higher in corrupt regions. Taking into account that a large fraction of round-trip investment in Russia is concentrated in real estate and financial sectors, our results point to the conclusion that there is a strong link between round-trip investment and corruption money laundering.

Suggested Citation

Ledyaeva, Svetlana and Karhunen, Päivi and Whalley, John, Offshore Jurisdictions (Including Cyprus), Corruption Money Laundering and Russian Round-Trip Investment (May 2013). NBER Working Paper No. w19019, Available at SSRN: https://ssrn.com/abstract=2260657

Svetlana Ledyaeva (Contact Author)

University of Joensuu - Department of Economics and Business ( email )

P.O. Box 111
80101 Joensuu
Finland

Päivi Karhunen

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

John Whalley

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada
519-661-3509, ext. 83509 (Phone)
519-661-3666 (Fax)

HOME PAGE: http://www.ssc.uwo.ca/economics/faculty/

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for International Governance and Innovation (CIGI) ( email )

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Canada

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