Looking for Plan B: What next for island hosts of offshore finance?

Abstract

This paper examines offshore finance centres and tax havens that are hosted by small island economies (SIEs). In many cases, hosting offshore finance has been a lucrative activity for SIEs since the 1960s in terms of employment (direct and indirect), and overall contribution to GDP and government revenues (Hampton and Christensen, 2002). Despite the scale and reach of the global offshore economy, at present many SIE hosts face an unsettled future in light of significant international pressure from nation states, international organisations such as the EU and OECD and, increasingly, from civil society in both the developed and less developed world. Given the economic importance of hosting offshore finance for many SIEs around the world, the paper discusses the development options facing many island jurisdictions. The paper poses the fundamental question: what has changed since the major initiatives around the year 2000, and then discusses the situation facing many SIEs hosts, the changing global political economy and their shifting negotiations and alliances within it