draining development.pdf - Khazar University

300 Draining Development?Figure 9.4. Top 20 Subsidiaries by Secrecy Jurisdiction, Population, and GDP700600Subsidies per 1,000 peopleSubsidies per GDP (US$ billions)5004003002001000.0Cayman IslandsBritish Virgin IslandsNauruMarshall IslandsBermudaJerseyGuernseyGibraltarIsle of ManMonacoTurks & Caicos IslandsCook IslandsNetherlands AntillesU.S. Virgin IslandsLuxembourgAnguillaBahamasLiberiaMauritiusBarbadosSource: Mapping Financial Secrecy (database), Tax Justice Network, London, http://www.secrecyjurisdictions.com/index.php (accessed December 12, 2009).That this must be true is indicated by the number of subsidiaries activein financial services as a proportion of the total working population inthe secrecy jurisdictions. As TJN has noted, this exceeds 20 percent inCayman Islands, Guernsey, Isle of Man, and Jersey and 10 percent in Bermuda,Liechtenstein, and Luxembourg. 29 Financial service sectors of thissize crowd out the possibility of any other significant economic activitytaking place. The overlap between this list (figure 9.4) and the locationswith the most MNC subsidiaries (table 9.5) is obvious, and the implicationis clear: these locations do not create value. Their sole raison d’être isthe provision of corporate and financial service structures that mayrecord value, but do not generate it. Of course, one way in which thisvalue may be relocated into these places is through transfer mispricing.