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World City Network Analysis and the Curious Omission of Offshore Tax Dodging: Addressing the Multi-Trillion Dollar Elephant in the Room

Authors: Michael Tyrala*, Hong Kong University of Science and Technology
Topics: Urban Geography, Economic Geography, Political Geography
Keywords: World City Network Analysis, Offshore Tax Dodging, Interlocking Network Model, Advanced Producer Services Firms, Tax Havens
Session Type: Paper
Day: 4/7/2020
Start / End Time: 9:50 AM / 10:05 AM
Room: Virtual Track 11
Presentation File: No File Uploaded

World city network analysts have made considerable progress in understanding contemporary globalization by conceptualizing an interlocking network in which relations between cities are constituted by a set of core-forming processes tied to the activities of the largest advanced producer services firms which organize, manage, and control practically all cross-border flows characterizing the capitalist world-economy. Among the most important achievements of these efforts has been the analysis of 175 firms in the accounting, advertising, banking, finance, insurance, law, and management consulting sectors, and the consequent identification and ranking of 526 cities which make up the interlocking network. In this paper I argue that given its immense scale and uneven distributional impacts, offshore tax dodging has become a crucial yet unacknowledged core-forming process, and that its omission severely undermines the accuracy and thus the usefulness of this ranking by underestimating the network sizes of a significant portion of the firm sample, which then leads to the downplaying and even exclusion of several major tax havens mistakenly deemed as peripheral. I begin by tracing the rise of offshore tax dodging from a relatively minor phenomenon to one currently amounting to somewhere between US$7.6 to US$32 trillion of untaxed financial wealth and growing by at least US$200 billion annually. I then utilize data from the Offshore Leaks Database and other financial data sources to demonstrate the indispensable role of advanced producer services firms and tax havens in enabling offshore tax dodging. And finally, I offer specific recommendations for eliminating this critical methodological blind spot.

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