The rise of global communication technology has virtually eliminated boundaries creating a hyper-globalized economy allowing financial flows access to markets in all corners of the world.
This has enabled the spread of global transactions stimulating innovation and growth along many areas of the global economy.
However, the current trend of globalization is now fast becoming authoritarian, moving away from a hands-off liberalized version, as it has become entirely self-serving, governed and manipulated by the economic elites, Multi National Corporations (MNC), and powerful state governments and institutions that have to a large degree forced their agendas and policies on the rest of the world.
Western industrialized countries have become more forcefully outspoken against the perceived inadequacies of the current offshore system as it watches frantically its capital flowing out too alternative low-tax markets.
This is, however, a natural movement of a person or asset in a liberalized economic order - one that seeks to maximize efficiency where one has a comparative advantage.
Intimidation tactics, trade barriers, and economic blacklisting have been used as response as a means against the smaller Offshore Financial Centers (OFC) that do not go along with the new regulations and supervisory institutions established.
As many of these OFCs are former colonies whose economic development has been severely curtailed by continuous exploitation and occupation it has little other recourse but to create avenues of competition in sectors where it retains some advantage.
Since the last global financial crises, emerging markets have been particularly hit, coupled with the increased regulatory effects that have come since, has severely threatened the economy of many financial havens.
In order to attract foreign capital, many emerging markets offer low tax burden recipes and vehicles to attract foreign investments.
Just like many western countries, seeking to attract investors and economic opportunities give advantages to companies seeking to establish themselves in certain sectors; similarly, many emerging market countries have created a financial environment that seeks to due to same - provide conditions that favor international investment and capital flows.
While certainly overly-exposed unregulated areas of the worlds economy need tighter regulations to prevent malfeasance, they should do so in collaboration and not by brute force.
These regulations come primarily through the economic hegemony of highly developed nations that seek to retain their grip over the worlds economy by exploiting their unequal balance of power enjoyed primarily from its past imperialistic legacy.
And so, such countries not wanting to lose any possible tax revenue, have used regulatory bodies including the U.S. Government, EU, OECD, and FATF to ensure that their place in the world order remains intact.
Income tax competition remains a significant sore spot for many developed countries that seek to keep a firm hold on their tax base.
The OECD deems such income tax competition as harmful to the global economic order, and suggests that they are acts of ‘civil disobedience against income redistribution’.
The dangers of labeling one form of competition as dangerous and another as advantageous, like income tax and commercial trade, for instance, comes with biases and colors what should be pure open market liberalization.
It moves farther away from an free open border economic globalization that encourages innovation and competition through the freedom of financial movement, and becomes more like a fascist world order of slaves and masters.