Bermuda rates well against economic giants
Bermuda has been held accountable to meet yet another economic compliance hurdle.
We’ve been in these scrutinised headlines before. We’ve heard it all before — from country friends and economic foes alike.
Frustratingly, from our sophisticated regulatory perspective, Bermuda, in general, has qualified in synchronisation, or even ahead of increased compliance missives (witness our 1940s registry of beneficial interests), even anticipating legislating governance regulations before needed. We’ve done what we are supposed to do.
The news reporting of the day is barely a snapshot in time, that does not recognise our decades-long solid reputation.
But, we want some validation. How do we rate as an economic partner, and as a jurisdiction, on a global basis?
I decided to do a bit of research to find out just how we compare to our much larger trade partners to the west and east, US, UK, and France, utilising the amazing research data statistics from the World Bank.
The World Bank has a fascinating website, chock full of global data, country ratings with serious research papers by experienced, credentialled authors on finance, immigration, governance, health, poverty, gender, trade, jobs, economics, etc.
Their additional data culled from more than 30 sources is equally impressive:
Afrobarometer, Gallup World Poll, and Global Competitiveness Report, Economist Intelligence Unit, Global Insight, Political Risk Services, Global Integrity, Freedom House, Reporters Without Borders, Country Policy and Institutional Assessments of World and Regional Development Banks, the European Bank For Reconstruction And Development Transition Report, the French Ministry of Finance Institutional Profiles Database and more.
The World Bank Governance Indicators indices report on six broad dimensions of governance for over 200 countries and territories over the period 1996-2017. http://info.worldbank.org/governance/wgi/index.aspx#reports
Governance consists of the traditions and institutions by which authority in a country is exercised. This includes:
• The process by which governments are selected, monitored and replaced.
• The capacity of the government to effectively formulate and implement sound policies.
• The respect of citizens and the state for the institutions that govern economic and social interactions among them.
It is important to note that the six composite WGI measures are variables, and useful as a tool for broad cross-country comparisons and for evaluating broad trends over time; however, detailed, country-specific diagnostic data is recommended assessment of a particular country circumstances:
• Voice and accountability: captures perceptions of the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media.
• Political stability and absence of violence — measures perceptions of the likelihood of political instability and/or politically motivated violence, including terrorism.
• Government effectiveness: shows perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies.
• Regulatory quality: captures perceptions of the ability of the Government to formulate and implement sound policies and regulations that permit and promote private sector development.
• Rule of Law: perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence.
• Control of Corruption: shows perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites and private interests.
How did Bermuda fare?
Chart 1: (see all charts in the attachment under “Related Media” on this webpage) comparing political stability and government effectiveness against the three huge nation states of France, USA and UK, Bermuda is very well rated.
Our political stability considered better, far better in relevant years than the big three.
On government effectiveness, we kept pace, slightly behind, compared against three titan governments hundreds of percentages larger than ours.
Chart 2: on regulatory quality, again our measurement holds equality with our neighbours.
Control of corruption, assessment is on par with all three trade competitors.
Chart 3: voice and accountability and the rule of law. Again, Bermuda ratings are very good, significantly so when comparing breadth, depth, government financial pocketbooks, and accesses to the best talent from millions of citizens of these three superpowers against the resources of tiny Bermuda.
So what does this all mean? Is there any relevance to the latest compliance issue?
The question that should be asked is, if a country is rated highly in integrity, on control of corruption, good governance, rule of law, regulatory efficiency, and related matters by unbiased global research institutions and parties, how then can it be arbitrarily inferred that the same country is deficient in the same fiscal and compliance criteria?
Are the statements political, economic, regulatory? All of the above?
Can it be just that competition for trade will never cease?
Will there always be aggressive attempts to neutralise smaller trade competitors of their established bona fide reputations? Large countries can employ unlimited financial resources, political clout, trade sanctions, global membership organisation regulatory labels and restrictions to overwhelm small jurisdiction budgets.
The irony, in many instances, is that while Bermuda is judicious in her overall governance, other countries have not been so proactive in corresponding governance and regulatory matters, verified facts that have been reported in media on numerous occasions, eg requiring little to no disclosure of beneficial ownership in corporations.
Bermuda will carry on.
We will not relent. Every disparagement against our reputation must continue to be fiercely deflected. We must be even more proactive: lobbying, collaborating with like-minded jurisdictions, anticipating, and enhancing our regulatory structure to effectively neutralise the next wave of global trade, tax and finance lists or sanction threats.
We can do this. Bermuda can do this. We are independent innovators with more than 400 years of trade warfare (and real wars) experience in economic survival.
Readers, I encourage you to spend some time on the World Bank website. Tremendously illuminating!
The World Bank Data Statistics, Creative Commons and the Open Knowledge Repository, http://info.worldbank.org/governance/wgi/index.aspx#home
• Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette. All proceeds earned from this column go to The Reading Clinic. Contact: firstname.lastname@example.org