For decades, scholars have struggled to determine how to deploy laws and legal institutions to spur economic prosperity. But, without knowing which legal rules and institutions to prioritize for a particular social context, the outcomes have been generally unsatisfactory. The case of offshore financial centers provides fresh and compelling new insights into this puzzle. This Article uses the sociological concept of community economic identity (“CEI”) to understand why some offshore financial centers prioritize investments in legal institutions that bolster their offshore finance enterprises while others do not. CEI refers to a community’s shared identity that is linked to a specific commercial enterprise.

Some offshore financial centers, such as the United Kingdom Overseas Territories (“UKOTs”) of Bermuda, British Virgin Islands, and Cayman Islands, have developed CEIs around their offshore sectors. This identity has led them to make credible and enduring commitments to legal rules and institutions — innovative corporate laws, financial regulatory agencies, and specialized commercialized courts — that directly support offshore finance activities. Other offshore financial centers, such as the UKOTs of Anguilla, Montserrat, and Turks and Caicos Islands, have not developed a CEI around offshore financial services and lack these sorts of legal and institutional investments. These jurisdictions have also not seen the same level of offshore finance success as Bermuda, British Virgin Islands, and Caymans Islands. CEI may therefore be relevant to determining which legal rules and institutions are appropriate to a particular jurisdiction’s economic prosperity.