Lukas Hakelberg receives ERC grant for his research on the emergence of tax havens in the Global South

The ERC has awarded Prof. Dr. Lukas Hakelberg a Starting Grant for his project entitled “The Whiteness of Wealth Management: Colonial Economic Structure, Racism, and the Emergence of Tax Havens in the Global South (WOWMA)”. During its runtime, he will analyse the development of tax havens with a focus on colonial economic structures, income tax adoption, the survival of white oligarchies, and racism.

The political scientist assumes that the respective agricultural suitability of small island states determined where tax havens were created. Agricultural suitability shaped the colonial economic structure, which in turn influenced the racialization of the population. During the decolonialisation process, tax havens emerged where the colonial regime had not introduced income taxes due to low economic activity and where non-white populations had gained comparatively few political rights. The continued rule by white oligarchies favoured the involvement of white financial experts in the legislative process. Moreover, it diminished the often racially motivated fear of expropriation by non-white, post-colonial governments.

In a first step, Lukas Hakelberg and his team will collect historical data to gain a better understanding of the economic structure, state capacity and democratisation of all tropical island states. To test the initial hypothesis, the data will then be analysed in qualitative case studies and with causal inference methods. In a second step, the team will conduct conjoint experiments. This involves, for instance, to ask wealthy people to select a country (from a hypothetical pair) in which they would preferably locate their assets. Prof. Hakelberg wants to use this tool to clarify whether the head of state’s skin colour impacts investment decisions – or in other words: whether racial prejudices persist.

From April 2024 to March 2029, the WOWMA project will focus on entirely new aspects of the research topic. While relevant economic theories identify political stability as a key factor in the emergence of tax havens, Hakelberg argues that Western investors saw stability primarily where white oligarchies remained in power. In turn, they perceived instability where democratisation processes empowered non-white populations.

The European Research Council awards Prof. Dr. Lukas Hakelberg a Starting Grant of more than 1.49 million euros for the project period of five years. With this programme, the ERC supports outstanding young scientists who are conducting cutting-edge research in their field.

Back to Project Overview