Clark University

ECONOMIC GEOGRAPHY ISSUE: Vol. 91 No. 3 July 2015

 

 

 

Design of new Economic Geography JournalEconomic Geography is an internationally peer-reviewed journal, committed to publishing cutting-edge research that makes theoretical advances to the discipline. Our long-standing specialization is to publish the best theoretically-based empirical articles that deepen the understanding of significant economic geography issues around the world. Owned by Clark University since 1925, Economic Geography actively supports scholarly activities of economic geographers. Economic Geography is published quarterly in January, April, July, and October.

CONTENTS

 

 

Editorial

Journal Articl

 

SPECIAL SECTION

Editorial Introduction to the Special Section: Deconstructing Offshore Finance

Gordon L. Clark, Karen P.Y. Lai, Dariusz Wójcik, Pages 237–249
Abstract | Complete Article | Enhanced Article

 

Regional Blocks and Imperial Legacies: Mapping the Global Offshore FDI Network

Daniel Haberly, Dariusz Wójcik, Pages 251–280
Abstract | Complete Article | Enhanced Article

 

The Financial Secrecy Index: Shedding New Light on the Geography of Secrecy

Alex Cobham, Petr Janský, and Markus Meinzer, Pages 281–303
Abstract | Complete Article | Enhanced Article

 

Offshore Foreign Direct Investment, Capital Round-Tripping, and Corruption: Empirical Analysis of Russian Regions

Svetlana Ledyaeva, Päivi Karhunen, Riitta Kosonen, and John Whalley, Pages 305–341
Abstract | Complete Article | Enhanced Article

 

 

 

 

 

 

Cultural Gravity Effects among Migrants: A Comparative Analysis of the EU15

Annie Tubadji, Peter Nijkamp, Pages 343–380
Abstract | Complete Article | Enhanced Article

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BOOK REVIE

 

The Oxford Handbooks of Land Economics edited by Joshua M. Duke and Junjie Wu

Jacqueline Geoghegan, pages 381–383
Read Book Review | Enhanced Article

 

Food Systems in an Unequal World: Pesticides, Vegetables and Agrarian Capitalism in Costa Rica by Ryan E. Galt

Kees Jansen, pages 385–386
Read Book Review | Enhanced Article

 

Geografía de la Crisis Económica en España [Geography of the Economic Crisis in Spain] edited by Juan M. Albertos Puebla and José L. Sánchez Her

David Sauri, pages 387–388
Read Book Review | Enhanced Article

 

From Silicon Valley to Shenzhen: Global Production and Work in the IT Industry by Boy Lüthje, Stefanie Hürtgen, Peter Pawlicki and Martina Sproll

Shahid Yusuf, pages 389–391
Read Book Review | Enhanced Article

 

 

 

 

 

 

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ABSTRACTS

Editorial Introduction to the Special Section: Deconstructing Offshore Finance by Gordon L. Clark, Karen P.Y. Lai, and Dariusz Wójcik

Abstract: Recent scandals involving large corporations including Amazon, Apple, Google, Starbucks, and HSBC have highlighted the problems of tax avoidance, evasion, and offshore financial activities. Considering their significance to growing inequality and financial instability, renewed media and public attention is well justified, and new research on these topics urgent. At the same time, however, there is confusion in the very use of the term offshore finance. Some apply it interchangeably with tax havens; others go as far as to use it as a synonym of international finance. We argue that offshore finance needs a precise definition and careful positioning in a broader economic geographical framework. We suggest a definition based on the legal and accounting, in addition to financial, aspects of offshore finance, and we propose the concept of global financial networks to situate offshore jurisdictions and offshore finance in the firm–territory nexus and in relation to global production networks. This sets the stage for the three research articles presented in this issue, which map offshore financial networks at global and regional scales, and investigate their causes and mechanisms.

Key words: offshore finance; tax havens; financial centers; globalization

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Regional Blocks and Imperial Legacies: Mapping the Global Offshore FDI Network by Daniel Haberly and Dariusz Wójcik

Abstract: While foreign direct investment (FDI) is generally assumed to represent long-term investments within the real economy, approximately 30–50 percent of global FDI is accounted for by networks of offshore shell companies created by corporations and individuals for tax and other purposes. To date, there has been limited systematic research on the global structure of these networks. Here we address this gap by employing principal component analysis to decompose the global bilateral FDI anomaly matrix into its primary constituent subnetworks. We find that the global offshore FDI network is highly globalized, with a centralized core of jurisdictions in Northwest Europe and the Caribbean exercising a largely homogenous worldwide influence. To the extent that the network is internally differentiated, this appears to primarily reflect a historic layering of social and political relationships. We identify four primary offshore FDI subnetworks, bearing the imprint of four key processes and events: European, particularly UK colonialism, the post–WWII hegemonic alliance between the United States and Western Europe, the fall of Soviet communism, and the rise of Chinese capitalism. We also find evidence of qualitative, but not quantitative, variation in offshore FDI based on national rule of law and communist history.


Key words: offshore financial centers; FDI; principal component analysis; global financial network; investment vehicles; shell companies; BRICs; British Empire

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The Financial Secrecy Index: Shedding New Light on the Geography of Secrecy by Alex Cobham, Petr Janský, and Markus Meinzer

Abstract: Both academic research and public policy debate around tax havens and offshore finance typically suffer from a lack of definitional consistency. Unsurprisingly then, there is little agreement about which jurisdictions ought to be considered as tax havens—or which policy measures would result in their not being so considered. In this article we explore and make operational an alternative concept, that of a secrecy jurisdiction and present the findings of the resulting Financial Secrecy Index (FSI). The FSI ranks countries and jurisdictions according to their contribution to opacity in global financial flows, revealing a quite different geography of financial secrecy from the image of small island tax havens that may still dominate popular perceptions and some of the literature on offshore finance. Some major (secrecy-supplying) economies now come into focus. Instead of a binary division between tax havens and others, the results show a secrecy spectrum, on which all jurisdictions can be situated, and that adjustment for the scale of business is necessary in order to compare impact propensity. This approach has the potential to support more precise and granular research findings and policy recommendations.



Key words: offshore finance; financial secrecy; geography of financial secrecy; tax havens finance



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Offshore Foreign Direct Investment, Capital Round-Tripping, and Corruption: Empirical Analysis of Russian Regions by Svetlana Ledyaeva, Päivi Karhunen, Riitta Kosonen, and John Whalley

Abstract: Recent economic geography research has identified the round-tripping of capital from emerging economies to offshore financial centers (OFCs) and back as foreign direct investment (FDI) as a central element of the global offshore FDI network. However, the factors behind this phenomenon are not yet fully understood. Our study develops a general framework that conceptualizes the phenomenon of round-trip investment. In particular, we argue that secrecy arbitrage, defined as interplay of onshore corruption and offshore secrecy, largely explains round-trip investment between onshore jurisdictions and OFCs. First, we argue that part of the round-trip FDI consists of proceeds from corruption, which is laundered in OFCs and reinvested back to the location of origin. Second, we maintain that the secrecy dimension of the OFC also motivates the round-tripping of licit capital, as businesses use the secrecy provided by OFCs to hide their true identities from corrupt authorities in the home location. To test the validity of our argument about onshore corruption as a driver for round-trip investment, we empirically analyze firm-level data on the distribution of offshore FDI (which, we argue, is largely round-trip) across Russian regions. Our empirical findings confirm that FDI from OFCs is positively associated with host region corruption, and this relationship is stronger for OFCs with a higher secrecy score. Hence, we conclude that round-trip FDI is strongly motivated by the interplay between onshore corruption and offshore secrecy.


Key words: Foreign Direct Investment; Russia; Regions; offshore financial centers/offshore jurisdictions; corruption; illicit money laundering; secrecy arbitrage


Complete Article       Enhanced Article

Cultural Gravity Effects among Migrants: A Comparative Analysis of the EU15 by Annie Tubadji and Peter Nijkamp

Abstract: This article introduces cultural gravity as a concept that serves to better disentangle the direction and magnitude of the effects from migration, which is controversial in recent literature. The aim is to test for cultural gravity effects on both the geographic concentration and human capital productivity of immigrants in the EU15 countries. Operationally, we proceed to construct an empirical cultural gravity measure and test it with the use of a composite cross-sectional database, comprising, inter alia, the World Value Survey and Eurostat Census data. After an initial exploration of relevant cultural data by means of multivariate statistical analysis, we present an extended formulation of a gravity model approached through logistic regression methods and a three-stage least-squares estimation. Our results clearly demonstrate the existence of a cultural gravity effect among immigrants. Finally, an interesting finding is that cultural gravity also plays a significant role in the context of the Culture-Based Development (CBD) growth model.


Key words: immigration; gravity; cultural distance; human capital; cultural capital; productivity



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