Tax Havens and Tourism: The Impact of the Panama Papers and the Crowding Out of Tourism by Financial Services

Tax havens are often connected to growth in tourism, as finance and tourism conveniently share infrastructural prerequisites. This paper addresses the detrimental impacts of a tax haven development strategy adopted by small open economies relation their industry. Utilizing synthetic control method, we find that since 2016 Panama Papers scandal, Panama’s exports have fallen relative an estimated counterfactual level would otherwise been attained. Moreover, based on analysis panel data drawn from 20 economies, long run, financial industry crowds out Our findings warn practitioners, havens, they face additional risk linked potential scandals. Furthermore, may suffer reputational harm due blacklisting crowding productive resources JEL classifications: F43, H26, O57, Z32