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

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  • Svetlana Ledyaeva
  • Päivi Karhunen
  • John Whalley

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.

Suggested Citation

  • Svetlana Ledyaeva & Päivi Karhunen & John Whalley, 2013. "Offshore jurisdictions (including Cyprus), corruption money laundering and Russian round-trip investment," NBER Working Papers 19019, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19019
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    File URL: http://www.nber.org/papers/w19019.pdf
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    References listed on IDEAS

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    Cited by:

    1. Michaelides, Alexander, 2014. "What Happened in Cyprus?," CEPR Discussion Papers 9993, C.E.P.R. Discussion Papers.
    2. Päivi Karhunen & Riitta Kosonen & Svetlana Ledyaeva & Julia Wörz, 2014. "FDI in Russia from CESEE and Central Asia: A Micro-Level Perspective," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 54-70.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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