Redefining “Offshore” in Latin America

Offshoring and outsourcing are two terms—often used interchangeably—that comprise an essential element of the modern post‐industrial global economy. Analysis of this phenomenon in the United States is often framed in the light of job loss and economic decline relating to the manufacturing or low‐end services sectors, but this paper will revisit the traditional offshore industry—that of offshore finance and offshore financial centers (OFCs) and compare OFC offshoring with traditional offshoring in Latin America. This paper argues that some similarities are evident when comparing OFC offshoring with traditional offshoring but many differences exist. Using the framework or “lens” of politics certain OFC offshoring issues and tensions with the onshore world relating to unfair tax competition, money laundering, sovereignty, secrecy, regulation, trust, and reputation are analyzed and are shown to be more onerous, tense and different from those occurring in the mainstream offshoring/outsourcing world. In addition, using the “lens” of cyberspace and e‐commerce, and a case study of the Cayman Islands and the Bahamas, this paper argues that the creation of an electronic infrastructure in the OFC offshoring world is as necessary as in the onshore world, but the actors and institutions creating and promoting such infrastructures are different. Future work could pursue more reputable and comparative data gathering to further more rigorous statistical modeling of the relationships both between OFCs as they compete for offshore capital, and between offshore and onshore as the onshore world seeks to further lift the veil of offshore financial opacity, particularly related to issues of money laundering.