Redefining Periphery: Offshore Finance, Peripheral States and the World Economy

This article seeks to examine the changing dynamics between the periphery and the core of the world economy. Small, peripheral states have assumed an increasingly important role in recent decades by offering fi nancial services to an increasing and geographically expanding range of corporate entities and wealthy individuals. These Offshore Financial Centres (OFCs) or tax havens, offer a service, which often has negative consequences for non-OFC countries at the core of the global economy. Despite pressure from the latter, these small states at the periphery of the global state system are able to continue their operation unabated. This is possible because in a world of growing technological nterconnectedness and capital mobility these states are able to employ the one resource they possess that has no limits: their legal sovereignty, that is, their right to write and enact law. By effectively commercializing their sovereignty small states are able to offer “juridical relocation”, a valuable service to wealthy individuals and companies around the world, which in turn employ them as a core piece in their intricate global wealth managing networks.