Title: Offshore Financial Centre institutions in small jurisdictions in a globalised world: an empirical study of Vanuatu

Authors: T.K. Jayaraman, Chee-Keong Choong

Addresses: Faculty of Business and Economics, School of Economics, University of the South Pacific, Suva, Fiji Islands. ' Centre for Economic Studies, Faculty of Business and Finance, Universiti Tunku Abdul Rahman (Perak Campus), Jalan Universiti, Bandar Barat, 31900 Kampar, Perak, Malaysia

Abstract: Capital mobility and absence of direct taxation have made Vanuatu, an attractive Offshore Financial Centre (OFC) in the Pacific, since its independence in 1980. Consequently, Vanuatu has been depending on trade taxes. As Vanuatu would become part of a Pacific free trade area by 2015, policy makers are exploring new sources of tax revenue. An empirical investigation undertaken in this study shows that contribution of OFC institutions to Vanuatu|s growth since its independence in 1980 was negligible and insignificant. The paper points out to the direction that Vanuatu has to move and overcome its reluctance to introduce direct taxation.

Keywords: OFC; offshore financial centres; financial development; economic development; cointegration; causality; Vanuatu; capital mobility; direct taxation; trade taxes; Pacific free trade area; tax revenues; economic growth; emerging economies.

DOI: 10.1504/IJEPEE.2010.033776

International Journal of Economic Policy in Emerging Economies, 2010 Vol.3 No.2, pp.129 - 146

Published online: 30 Jun 2010 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article