On a map, the island of Mauritius is a tiny dot in the Indian Ocean. Nevertheless, because of its attractiveness to offshore financiers, it is officially the biggest foreign direct investor in India. The tax haven is responsible for a staggering 44% of the flows into that country. The US, by comparison, is the source of a mere 7%.

Now Mauritius is welcoming new investors: western governments, such as the UK and Norway. Strange as that may sound, their reason for investing in funds based there is stranger still. They are there to reduce poverty in developing countries.

Frustrated by the limitations of simply offering aid, western governments in recent years have turned to private equity funds to support economic growth in poor countries. These funds are largely based in tax havens, such as Mauritius.

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