data

Surprisingly, while official data from sources such as the International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) records how much money enters onshore economies from particular offshore jurisdictions, we have virtually no information on where this offshore money actual comes from before it passes through any such jurisdiction.

This means that the apparent shape of the world economy that we think we see in official data is largely a mirage created by tax avoidance and other offshore strategies. In effect, we know very little about what the world economy actually looks like. It is largely, and perhaps even mostly, hidden behind an offshore fog.

In theory, there is quite a bit of information available at both the country (macro) and the firm (micro) level that can help shed light on who this offshore money actually belongs to, and where it is actually going.

methodology

The fact that this information is fragmented between many different datasets, each revealing a different piece of the puzzle, has made it difficult to take advantage of this information, with most existing studies seeking to unravel the world map of FDI only exploiting one dataset at a time.

Fog of Finance seeks to put these pieces of the puzzle together as much as possible, drawing on a new methodological approach based on integrating information from multiple different macro and micro-level datasets.

By triangulating between the known data points in these resources, and the discrepancies between them, this methodology allows for a more detailed portrait of the "true" map of world FDI to be constructed than is possible through the use of any one dataset in isolation.

There is no officially recorded data that breaks down the true origin of funds that pass through offshore conduits, so this information has had to be generated through a novel methodology that produces a range of possible estimated values, rather than a precise value, for any given investment position.

Given that no information at all has up to now been provided on these investment values, the data presented here represents a significant step forward.

However, depending on the quality of the data underpinning the estimation of any particular investment, the range of uncertainty can often be very large, particularly in the case of smaller investments. As such, it is important to treat the data here as a rough indication of the general structure of the global offshore FDI network, rather than a precise blueprint of this structure.

From a statistical standpoint, the upper and lower estimates given in the interactive mapper are defined so that there is a 75% chance of the actual value falling between these estimates, which means that there will be many cases where the actual value is outside of this range.

Ultimately, it is up to the major national and international statistical agencies to compile the data that would allow for these figures to be precisely known, rather than only roughly estimated as done here.