Proposal preview

Passage to Panama: Nation States, Taxation and Multinational Enterprise in the Twentieth Century

Taxation, a foundation stone of nation states and modern democracy, has also been a fulcrum where the logic of sovereign states and the interests of international businesses clash. The recent publishing of the so-called Panama Papers, increasing the level of criticism against the global plutocracy and the flagrant business practices of MNEs, riveted the public’s attention on this aspect of the globalized economy. However, although attempts by MNEs to minimize the amount of taxation levied by state authorities is not a new phenomenon, the historical antecedents of the utilization of devices such as tax havens remains a largely unexplored field of study in the standard, scholarly literature. On the basis of an interdisciplinary approach, the intention in this panel is to provide new insights and perspectives on how the ‘Passage to Panama’ developed in the course of the twentieth century. Political risk related to questions of taxation have been an overlooked but decisive element for the creation of tax havens. The outbreak of the WWI, namely “the beginning of the end” of so-called first globalization” and the collapse of old empires was an enormous external shock for multinationals, which had already extensive global networks of FDI. For example, in the midst of the calamities of collapse of the Dual Monarchy and the rising risk of a communist revolution, Swiss MNEs, lawyers and banks worked closely with Liechtenstein to introduce a new tax regulation and an innovative corporate law to host a series of MNE holding companies. It served as a measure to safeguard their assets against both political risks and taxation. In 1927, Panama followed suit with similar legislation and eventually became the international hub for the relocation of assets from Nazi dominated Europe to the Americas – the beginnings of the ‘passage to Panama’.
Growing nationalism in the interwar years and collapse of international economic order posed a variety of political risks ranging from boycotting, black-listing, asset freezing, persecution of staff, to total asset seizure in the Second World War. After 1945, the rise of the modern welfare state and associated taxation regimes added to the political risks. Both international business (the financial sector, investors, law firms, as well as MNEs) and a variety of political entities (home and host nations of FDI, international organizations) had to address these new challenges. A further division of global markets through the coming of the Cold War, founding of Communist China, nationalistic economic policy in post-colonial countries and incessant regional conflicts made the ’emergency setup‘ of firms indispensable for the rest of the century. On the one hand, national governments regarded the measures taken by MNEs as a threat to their sovereignty. On the other hand, most major economic powers supported the creation of ’safe-havens‘ or loopholes, to safeguard international business domiciled in their country. International tax policy had close links to FDI-related national policies. An historical study of the taxation-MNE relationship can contribute, therefore, not only to international business history, but also to a greater understanding of the nature of sovereign states and international politics.
Albeit interdisciplinary in nature, the research questions underlying this session have a profound relationship to the ’core‘ research questions of conventional business history, namely the problems of strategy and structure. A variety of forms of organizations, such as holding company, shell-company, voting-right-trust, Interessengemeintschaft and complex structure of a variety of corporate forms were adopted to cope with what were perceived as unacceptable levels of taxation and political risk. In conventional views on the development of ’modern‘ big businesses, a linear development from simple company to holding company and, further, to the diversified divisional structure has been assumed. Although such a classical view has been intensely contested in the last two decades, attention to the variety of ’organizational designs‘ and legal setups have been largely out of scope for scholars, leaving room for re-interpretation of organizational innovations from a new perspective – an international and transnational comparative study of the complex interactions between nation states, taxation and MNEs that gave rise to the ‘passage to Panama’.


  • Neil Forbes, Coventry University,, UK
  • Takafumi Kurosawa, Kyoto Unversity,, Japan
  • Ben Wubs, Erasmus University, Rotterdam,, Netherlands

Session members

  • Ralf Banken, Goethe University, Frankfurt,
  • Marten Boon, Norwegian University of Science and Technology,
  • Billy Frank, University of Central Lancashire,
  • Ryo Izawa, Shiga University,
  • Huei-Ying Kuo, Johns Hopkins University,
  • Kevin Tennent, The York Management School,
  • Kristine Sævold, University of Bergen,
  • Simon Mollan, The York Management School,
  • Luciano Segreto , University of Florence,
  • Álvaro F Silva, Nova School of Business and Economics,
  • Grietjie Verhoef, University of Johannesburg,
  • Robert E Wright, Augustana University,

Proposed discussant(s)

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