Offshore jurisdictions (including Cyprus), corruption money laundering and Russian round-trip investment

Svetlana Ledyaeva, Päivi Karhunen and John Whalley

No 19019, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we analyze the link between corruption money laundering and round-trip investment via offshore jurisdictions utilizing Russian firm-level data. In particular we empirically explore location strategies of round-trip investors (namely, from Cyprus and British Virgin Islands) across Russia and compare them with the benchmark group of genuine foreign investors in Russia. We further study the determinants of the fraction of round-trip investment in total foreign investment in Russian regions. We find that round-trip investors tend to locate in more corrupt Russian regions than their genuine foreign counterparts and the fraction of round-trip investment is also significantly higher in corrupt regions. Taking into account that a large fraction of round-trip investment in Russia is concentrated in real estate and financial sectors, our results point to the conclusion that there is a strong link between round-trip investment and corruption money laundering.

JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-cis, nep-iue and nep-tra
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Published as Offshore Foreign Direct Investment, Capital Round-Tripping, and Corruption: Empirical Analysis of Russian Regions Svetlana Ledyaeva1, Päivi Karhunen2, Riitta Kosonen2 andJohn Whalley3 Article first published online: 9 MAY 2015 Economic Geography Volume 91, Issue 3, pages 305–341, July 2015

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