New report confirms importance of offshore centres to world economy

LONDON, England -- The positive role that offshore financial centres play in supporting growth around the world is highlighted in a new report, International Finance Centers and the World Economy, published today. The report was commissioned by the Society of Trust and Estate Practitioners (STEP) from prominent US economist Professor James R Hines Jr of the University of Michigan and NBER.

Ahead of this weekend’s G20 Finance Ministers’ meeting the report gives a strong indication of the key role well regulated offshore centres now play in the global economy by providing capital to support business activity in neighbouring economies.

The report finds strong evidence from a range of sources that offshore centres play a vital role in the international financial system, improving the availability of credit and encouraging competition in domestic banking systems. The result is a boost in investment in the major economies which ultimately supports job creation and growth.

Professor Hines commented that: “The evidence indicates that offshore centres contribute to financial development and stability in neighbouring countries, encouraging investment, employment, and other aspects of business development. They have salutary effects on tax competition, promote good government, and enhance economic growth elsewhere in the world.”

Chief Executive of STEP Worldwide David Harvey welcomed the report saying: “This report provides further robust evidence of the positive role offshore centres play in the world economy. Post credit-crunch we must ensure capital keeps flowing and Professor Hines’ report demonstrates by every measure credit is more freely available in countries which have close relationships with offshore centres”.

Last week the Foot Review of British offshore financial centres found that they provided net financing to the British banking system of $332.5 billion in the second quarter of 2009.

November 5, 2009

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Bahamas Caribbean Blog International

Saint Vincent speaks out at UN debate on efforts to clamp down on tax havens

29 September 2009 – The efforts of major and industrialized economies to crack down on so-called tax havens are just an excuse to spread the blame for the global financial crisis on small nations’ legitimate attempts at development, Saint Vincent and the Grenadines told the General Assembly today.

Camillo M. Gonsalves, the Caribbean archipelago’s Permanent Representative to the United Nations, told the sixth day of the Assembly’s high-level segment that is country faces “being stigmatized out of our transition into financial services” by the Group of Twenty (G20) major economies, the Organization for Economic Cooperation and Development (OECD) and what he called “other non-inclusive bodies.”

Speaking at UN Headquarters in New York, Mr. Gonsalves said the crackdown on tax havens were actually “a pathetic effort to cast a wide and indiscriminate net of blame across a swath of legitimate and well-regulated countries’ development efforts.

“We note the irony of these paternalistic prescriptions from the same countries that are unable to stem corruption and mismanagement within their own borders, where corporations recklessly squander trillions of dollars and a single buccaneer investor can make $50 billion disappear into thin air – an amount greater than the combined annual budget expenditures of the entire CARICOM [Caribbean Community] sub-region,” he said.

Mr. Gonsalves took aim at the G20 for describing itself last week, at a summit in the United States city of Pittsburgh, as the premier forum for international economic cooperation.

“Saint Vincent and the Grenadines is not a member of the G20, nor were we consulted on its ascension to the ranks of arbiters of our economic fate… The G20 faces a serious legitimacy problem: aside from being non-inclusive and unofficial, many of the countries at that table represent the champions of the financial and economic orthodoxies that led the world down the rabbit-hole to its current economic malaise.”

The Permanent Representative also cast doubt on recent reports from some observers that the economy is returning to normal.

“The invisible hand of the market is still clasped firmly around the throats of poor people and the developing countries of the world. We see none of the so-called ‘green shoots’ that populate the fantasies of discredited economic cheerleaders.

“Indeed, the seeds sown by this crisis may produce the strange and bitter fruit of increased poverty, suffering and social and political upheaval. The crisis itself, with its disproportionate impact on the poor, will only widen and deepen the yawning gap between developed and developing countries.”

UN News

Bahamas Caribbean Blog International

News Tracker: past stories on this issue:

Dominican Republic calls for tax on tax havens to fund UN humanitarian goals