Globalisation may or may not be failing, but tax havens almost certainly are

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Martin Wolf has an article in the FT this morning saying that data shows the tide is turning on globalisation. He thinks the proportion of global trade in world GDP, the level of cross border investment and the level of foreign direct investment are all falling.

I think this data may well be right. But there is another explanation to that which he offers. This may all be down to the decline of tax havens. All the anecdotal evidence I am being given at present suggests that companies are getting out of tax haven activity as fast as they are able to do so: they believe public country-by-country reporting is coming and soon and do not want to be caught out in embarrassing situations.

So less trade is being artificially re-routed via tax havens.

And the artificial relocation of assets to tax havens is not happening.

And foreign direct investment is being made more directly, without calling into several tax havens on the way leaving it multiply counted.

The real levels of trade, asset holding and FDI may be exactly as before. It's just the double counting that the subterfuge of tax haven use requires might be on its way out, and with that the numbers may be shrinking. But all that might mean is that the numbers were always as artificially inflated as Ireland's GDP has been by Apple's tax dodging. In which case Martin Wolf may be worrying unnecessarily about the numbers.

Which is not to say that he isn't right about the failings of globalisation that he identifies in his article. They're real. But he should add false accounting to the list of things it facilitated.