Researchers have found that about 10 percent of world GDP is held in offshore tax havens, according to a working paper from the National Bureau of Economic Research.

They came to this conclusion after combing through the Panama Papers, a massive trove of leaked documents that, last year, showed a vast network of shell companies used by economic and political elites from around the world to hide their assets. Those who availed themselves of these services, it was found, included the current and former leaders of Russia, Iceland, Argentina, Georgia, Iraq, Jordan, Qatar, Saudi Arabia, Sudan, United Arab Emirates, and Ukraine, according to Bloomberg. Organized crime leaders, dictators, entertainment celebrities and plain old wealthy individuals have also been named in the leak. 

Beyond the information in the Panama Papers leak, the researchers also used data from the central bank of Switzerland, as well as offshore financial centers in Hong Kong, Singapore, the Cayman Islands and the Bahamas. In addition, they looked at anomalies in global investment statistics. 

"The equities, bonds, and mutual fund shares owned by households on foreign accounts are duly recorded on the liability side of the international investment positions of countries (the stock equivalent of the balance of payments), but not on their assets side. This causes a discrepancy between global portfolio liabilities and assets," said the researchers in the paper. 

The researchers noted in their paper that the 10 percent estimate, corresponding to $5.6 trillion in 2007, their benchmark year, is likely to be conservative. They noted that the statistic only captures financial wealth, disregarding valuables, works of art, real estate and other non-financial assets. 

The paper also breaks down how much of each country's wealth is held in offshore tax havens. Because nearly half of the world's offshore wealth was held in Switzerland in 2007, they estimated how much each country owns in Switzerland, then estimated how much each country owns in tax havens other than Switzerland, and combined the two distributions. What this method found was that there are wild swings from country to country of how much of its wealth is held offshore. Scandinavian countries, for example, only have a few percent of GDP in offshore wealth, but this rises to 15 percent when it comes to continental Europe, and as much as 60 percent in Russia, Gulf countries and a number of Latin American countries. 

The size of offshore wealth in each country, though, does not seem to correspond to any tax, financial or institutional factors. Countries with a great deal of offshore assets include autocracies like Saudi Arabia as well as longstanding liberal democracies like France and the UK. They include those with highly developed domestic financial institutions like Germany and Belgium, as well as those with poorly developed ones like Venezuela. Tax policy doesn't seem to make much of a difference either. While Denmark has a high tax rate and Korea has a low one, both are among the countries with the lowest stock of offshore assets. 

What does seem to matter, according to the researchers, is geography. Proximity to Switzerland is associated with higher offshore wealth, as is the presence of natural resources and post-WWII political and economic instability. For example, Russia is much closer to Switzerland than China, where offshore wealth amounted to only 2.3 percent of GDP in 2007 (though the researchers note that since then there has been a boom in the Hong Kong private banking industry, and so estimate that this figure has increased since then). 

The paper also looked at the distribution of assets in offshore tax havens. The researchers found that the top 0.1 percent richest households own about 80 percent of the total share, while the top 0.01 percent hold about 50 percent. Because the wealthy hold so many of their assets offshore, the paper notes that probably means inequality from country to country is probably worse than people think. Take France, for example: 

"While France appears more equal than Scandinavia when disregarding offshore assets, it becomes more unequal when factoring it. The United Kingdom—which, according to Alvaredo, Atkinson and Morelli (2017), is more equal than Scandinavia and France—becomes comparable to these economies," said the researchers. 

Incidentally, the paper says this effect is more muted in the U.S. because the top wealth shares there are already very high, even disregarding tax havens.