IMF data shows the massive role of tax havens in international investment

Today’s post is not directly related to the main topic of this blog – which is covering the media in tax havens – but I thought this table from the IMF Coordinated Direct Investment Survey was worth sharing. It shows the 10 countries which received the most direct investments from abroad in 2011 (please click to enlarge):

IMF graph2

2 things stand out: the first is that in per capita terms, there are 5 countries punching way above their weights, all of them secrecy jurisdictions. See below for example the per capita investment in China, led by BVI (population 23.000), Hong Kong, Luxembourg, Switzerland and the Netherlands.

Investment in China per capita 2011

In fact, however, as explained in this paper by Haberly and Wojcik, much of this offshore investment data is showing “round tripping”. So for example the BVI didn’t really invest over 12 million USD per capita in China in 2011, rather it was Chinese investors using BVI shell companies to operate anonymously in their own country.

The second note is that 3 secrecy jurisdictions – Hong Kong, Switzerland and Luxembourg – suppressed data on investment received from other secrecy jurisdictions such as the British Virgin Islands  “to preserve confidentiality” (see added red circles and footnote in table). Given that the data is aggregated at the national level, it can’t have been the confidentiality of individual investors they were preserving.

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