OFFSHORE FINANCIAL CENTERS: FEATURES OF FUNCTIONING AND IMPACT ON THE DOMESTIC AND WORLD ECONOMY
Abstract
The article considers the history of the formation of modern offshore financial centers (OFC), the main differences between offshore financial centers and tax havens. The aims of the study are: to determine the nature and specifics of OFC activities, to study the peculiarities of foreign direct investment from and in Ukraine by offshore companies, to establish the positive and negative consequences of offshore zones for the global economic system in general and for the domestic economy in particular. The main factors of attractiveness of offshore jurisdictions are analyzed. The motives that force offshore zones to actively increase their activities and the resulting benefits and losses for both the tax havens and for their customers have been studied. In addition, the positive and negative consequences of the functioning of offshore zones at the level of the world economy have been identified. Emphasis is placed on the fact that offshore jurisdictions have played a significant role in shaping the global financial crisis of 2008, in particular by issuing problematic ABCPs on its territory. Particular attention is paid to the study of the scale of offshorization of the Ukrainian economy. The structure of foreign direct investment in Ukraine, in particular in terms of countries, is considered. It is noted that the main specificity of foreign direct investment in Ukraine is the so-called round tripping operations, which consist in sending funds abroad by residents, which are then returned to the country in the form of foreign direct investment. A comparison of the share of round tripping operations in the total stock of direct investment in Ukraine with a similar indicator for other European countries is made, the existing trends of the indicator and the main reasons for its potential growth are studied. In addition, it was noted that another specific feature of FDI in Ukraine – the implementation of debt-to-equity operations, which are a compromise way to restructure debt, identified the main factors of their popularity. Based on a study of key factors in the popularity of offshore schemes among domestic entrepreneurs, ways to reduce the problem of large-scale offshoring of the Ukrainian economy to promote Ukraine's GDP and welfare of its citizens are proposed.
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