The Price of Offshore
The Price of Offshore is a ground-breaking study by James S. Henry estimating the magnitude of global offshore wealth. Last updated in 2012, the paper combines three methodological approaches—(1) an Accumulated Offshore Wealth model; (2) an Offshore Investor Portfolio model; and (3) direct estimates of offshore assets at the world's top 50 global private banks—and finds that as of 2010 a stunning $21-32 trillion has been invested virtually tax-free across the world's many offshore secrecy jurisdictions.
Download the paper here.
Access for the first time Henry's extensive database on capital flight from which he derived the estimates of global offshore wealth contained in The Price of Offshore. Recently updated with the latest figures, this database contains estimates on capital flight from 75 countries around the world, as well as six regional-level summaries.
Access the latest data here.
Methodological overview
Accumulated Offshore Wealth:
This model begins with a Sources and Uses analysis to calculate capital flows for 139 key "capital source" countries, mostly low-middle income countries, using the latest data from the World Bank/IMF, the UN, central banks and national accounts. It adds up a country's measured sources of foreign capital—foreign loans, net direct investment, and net portfolio investment—and compares them with recorded uses, including financing current account deficits and increasing official reserves. In principle, the difference between the recorded sources of foreign capital and uses of foreign capital may be attributed to unrecorded net capital outflows, which are assumed to be invested offshore. To estimate how much these accumulated offshore flows are worth over time, the model then applies an Accumulated Offshore Wealth analysis, assuming a large portion (75%) of these offshore earnings are reinvested in secure, low-yielding assets, denominated in traditional reserve currencies like the US dollar.
Offshore Investor Portfolio:
This model uses data from the Bank of International Settlements (BIS) on the total amount of cross-border banking deposits held by non-bank investors, removing those that are not held by individuals (mostly MNCs), and then applies a multiplier of what portion of investor's cross-border portfolios are held in cash or deposits, versus other assets.
Assets under management at Private Banks
While there are now over 500 private banks, hedge funds, law firms, accounting firms, and insurance companies that specialize in offshore, most of its employees work directly or indirectly for the world’s top 50 private banks. This systematic analysis of cross-border private banking assets at the top 50 international private banks for the period 2005-2010 draws upon data sources including company annual reports and 10ks, investment analysts, interviews with private banking industry experts, industry watchers like Wealth Briefing News and Money Laundering Alert, and a survey of recent market research studies for the private banking industry.