They are also factors that have led the International Monetary Fund to predict a slowing of global growth — from an estimated 6.1 percent in 2021 to 3.6 percent in 2022. But in the face of such widespread crises, it’s important to not lose sight of the fact that globalisation has for many decades been a force for good. It has increased trade, investment and jobs, and these things have in turn elevated living standards, reduced poverty and created opportunities not afforded to previous generations.
In his blog post, academic Douglas Irwin points out that globalisation has enabled most countries to grow richer over the past 40 years — along with a decline in global inequality. The proportion of the world’s population living in extreme poverty fell from 42 percent in 1981 to just 8.6 per cent in 2018. This fact is reinforced when considering world GDP, which grew from some $50tn in 2000 to about $75tn in 2016 — primarily as a result of economic interdependence and increased global trade.
International finance centres such as BVI have an important role to play in the story. They provide robust, trusted platforms that enable businesses to efficiently trade, transact, and invest across borders. Investments mediated by companies domiciled in BVI provide the underlying finance for investment in the infrastructure — roads, hospitals, and broadband — essential for growth.
Research has shown that investment mediated by BVI led to the creation of 2.2 million jobs globally, with an estimated annual contribution of over $15bn to government coffers worldwide (Capital Economics 2017). Developing countries in Asia, Africa and Latin America have been key beneficiaries of this efficient flow of capital and investment. None demonstrates this better than China, the poster child for globalisation — and the country that has helped take some 700 million people out of poverty on the way to becoming the world’s largest economy when rated in purchasing power parity (World Bank and IMF).
BVI has been a key strategic partner in this journey. According to UNCTAD World Investment Reports, it was the second-largest investor in China from 2006 to 2012, providing $7.72bn of inward foreign direct investment (FDI) to China in 2012. In terms of China’s outward FDI, in 2012 BVI was the fifth-largest recipient. Mainland Chinese and Hong Kong companies accounted for more than 40 percent of the $1.5tn in assets mediated through BVI, underscoring the offshore investment centre’s growing status as a hub for overseas investment.
More recently, the World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) have been involved in programmes which have used BVI vehicles to help facilitate projects in developing nations. In recent years, the IFC has invested $100m in a project in Tanzania. The sponsor had a registered office in BVI. Another project in Azerbaijan saw the EBRD lending $100m to five companies, one of which was a BVI-registered entity.
Over the past 40 years, globalisation has led to measurable improvements in the lives of millions. As Douglas Irwin says in his blog, globalisation deserves some credit for enabling once desperately poor countries to grow, and reduce poverty.
BVI will play its part in the next chapter of the story — by continuing to provide the most efficient platform for facilitating investment and trade, and in supporting economic growth.