Redefining Periphery: Offshore Finance, Peripheral States and the World Economy

PDF
Published: Oct 1, 2012
DOI: https://doi.org/10.12681/rp.18759
Keywords:
Offshore Financial Centres Tax Havens Periphery Legal Sovereignty Capital Mobility Shadow Banking
Dimitris Katsikas
Lecturer of International and European Political Economy, University of Athens
Abstract

This article seeks to examine the changing dynamics between the periphery and the core of the world economy. Small, peripheral states have assumed an increasingly important role in recent decades by offering fi nancial services to an increasing and geographically expanding range of corporate entities and wealthy individuals. These Offshore Financial Centres (OFCs) or tax havens, offer a service, which often has negative consequences for non-OFC countries at the core of the global economy. Despite pressure from the latter, these small states at the periphery of the global state system are able to continue their operation unabated. This is possible because in a world of growing technological nterconnectedness and capital mobility these states are able to employ the one resource they possess that has no limits: their legal sovereignty, that is, their right to write and enact law. By effectively commercializing their sovereignty small states are able to offer “juridical relocation”, a valuable service to wealthy individuals and companies around the world, which in turn employ them as a core piece in their intricate global wealth managing networks.

Article Details
  • Section
  • Research Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Authors who publish with this journal agree to the following terms:

· Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution Non-Commercial License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

· Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g. post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.

· Authors are permitted and encouraged to post their work online (preferably in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.

Downloads
Download data is not yet available.
References
Abbott K.W. and Snidal D. (2009) “The Governance Triangle: Regulatory Standards Institutions and the Shadow of the State”, in: Mattli W. and Woods N. (eds), The Politics of Global Regulation, Princeton and Oxford: Princeton University Press.
Acharya, Viral V. and Richardson, Matthew (2009), “Causes of the Financial Crisis”, Critical Review, 21:2, 195-210.
Acharya, Viral V. and Schnabl Philipp (2010), “Do global banks spread global imbalances? The case of asset-backed commercial paper during the fi nancial crisis of 2007-09”, NBER Working Paper Series, Working Paper 16079.
Adrian, Tobias and Shin, Hyun Song (2009), “The Shadow Banking System:Implications for fi nancial Regulation”, Financial Stability Review, No 13, Banque de France.
Baran, P. A. (1957), The Political Economy of Growth, New York: Monthly Review Press.
Barnett M. and Duvall R. (2005) “Power in Global Governance”, in Barnett M.and Duvall R. (eds) Power in Global Governance, Cambridge: Cambridge University Press.
Bureau for International Narcotics and Law Enforcement Affairs (2012),International Narcotics Control Strategy Report Volume II, Money Laundering and Financial Crimes, United States Department of State, March.
Drezner, D. W. (2007) All Politics is Global, Princeton and Oxford: Princeton University Press.
Dunning J.H. and Lundan S.M., (2008), Multinational Enterprises and the Global Economy, (2nd ed.), Cheltenham and Northampton: Edward Elgar.
Ernst & Young (2010), 2010 Global Transfer Pricing Survey, available at:http://www.ey.com/GL/en/Services/Tax/International-Tax/2010-Global-Transfer-Pricing-Survey
Financial Stability Forum (2000), Grouping of Offshore Financial Centres (OFCs) to Assist in Setting Priorities for Assessment, Press Release 26 May.
Frank A. G. (1967), Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil, New York: Monthly Review Press.
Gruber L. (2000) Ruling the World: Power Politics and the Rise of Supranational Institutions, Princeton: Princeton University Press.
International Monetary Fund (2000), “Offshore Financial Centres: IMF Background Paper”, Monetary and Exchange Affairs Department, June 23.
Johns R.A. and Le Marchant C.M., (1993), Finance Centres: British Isle Offshore Development since 1979, London and New York: Pinter Publishers.
Kobrin S. J. (2002), “Economic Governance in an Electronically Networked Global Economy”, in The Emergence of Private Authority in Global Governance, in Hall R. B. and Biersteker T. J. (eds), Cambridge:Cambridge University Press.
Neuer J. (1998) “Binding Territoriality and Functionality? Globalization Meets the Law”, in Emerging Legal Certainty: Empirical Studies on the Globalization of Law, in: Gessner V. and Budak A. C., (eds), Brookfi eld,USA; Aldershot, UK: Ashgate.
O’Brien R. (1991), Global Financial Integration: The End of Geography, London: Pinter Publishers.
Organization of Economic Cooperation and Development (1998), Harmful Tax Competition: An emerging Global Issue, Paris.
Palan R. (1998), “Trying to Have your Cake and Eating It: How and Why the State System Has Created Offshore”, International Studies Quarterly 42:625-644.
Palan R. (2002), “Tax Havens and the Commercialization of State Sovereignty”, International Organization 51 (1): 151-176.
Palan R., Murphy R. and Chavagneux C., (2010) Tax Havens: How Globalization Really Works, Ithaca and London: Cornell University Press.
Pozsar, Zoltan (2011), “Institutional Cash Pools and the Triffi n Dilemma of the U.S. Banking System”, IMF Working Paper, WP/11/90.
Pozsar, Zoltan and Manmohan Singh (2011), “The Nonbank-Bank Nexus and the Shadow Banking System”, IMF Working Paper, WP/11/289.
Pozsar, Zoltan, Adrian Tobias, Ashcraft, Adam and Hayley Boesky (2012),“Shadow Banking”, Federal Reserve Bank of New York Staff Reports, No 458.
Rixen T. (2008), “Politicization and the Institutional (Non-) Change in International Taxation”, Discussion Paper SP IV 2008-306, Wissenschaftszentrum Berlin Fϋr Sozialforschung.
Rixen T. (2012), “Offshore Financial Centres, Shadow Banking and Jurisdictional Competition: Why Reregulation after the Crisis is Feeble”, Unpublished Manuscript.
Sharman J. (2010), “Offshore and the New International Political Economy”, Review of International Political Economy 17 (1): 1-19.
Sharman J. (2012), “Canaries in the Coal Mine: Tax Havens, the Decline of the West and the Rise of the Rest”, New Political Economy (14 (4): 493- 513.
Simmons B. (2001) “The International Politics of Harmonization: The Case of Capital Market Regulation”, International Organization 55 (3): 589-620. United Nations Offi ce on Drugs and Crime (2011), Estimating Illicit Financial Flows Resulting from Drug Traffi cking and Other Transnational Organized Crimes, Vienna.
Wallerstein I. (1974), The Modern World-System: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth Century, New York: Academic Press.
Most read articles by the same author(s)