According to International Fund Researchers over $12 Trillion–almost 40 percent of all foreign direct investment globally is completely articifical and is really financial investment passing though empty corporate shells with no real activity, in order to hide the funds. The investments in empty corporate shells almost always pass through well-known tax havens. The eight major pass-through economies—the Netherlands, Luxembourg, Hong Kong SAR, the British Virgin Islands, Bermuda, the Cayman Islands, Ireland, and Singapore—host more than 85pc of the world’s investment in special purpose entities, which are often set up for tax reasons. The corporate shells employ almost nobody and create little economic activity in the host countries, compared to the usual expectation that FDI boosts economies.
The researchers also found that “citizens of some financially unstable and oil-producing countries hold a disproportionately large share of the $7 trillion personal wealth stashed in tax havens.”
They propose nations should gather more data on the financial sector, as well as adding information on global interconnections into economic statistics to better track the flow of funds.
