31. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments
- Author:
- Vincent Vicard, Amélie Guillin, and Anne-Laure Delatte
- Publication Date:
- 05-2020
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
- Topic:
- Economics, International Political Economy, International Trade and Finance, Finance, Borders, Investment, and Stock Markets
- Political Geography:
- Global Focus