Offshore companies in global production and financial networks: the case of the Ukrainian sunflower oil industry

Abstract

Despite efforts to regulate offshore firms, these entities remain widespread and influential in the global economy - yet their role in studies on global production has been understudied. This paper addresses this gap by examining the strategic importance of offshore firms in Ukraine's sunflower oil industry, a globally significant sector. Our findings show that although offshore enterprises make up just over one-third of the firms analysed, they dominate the sector in terms of revenues and exports. Alongside firms' ownership (foreign, offshore, and domestic), we investigated the role of other structural factors on value capture, such as firm size, position within production network (seed producers, oil producers, and exporters), and level of production diversification across two periods: before and after the 2014 Russian aggression. A firm's position in the production network proves crucial for the level of value capture. While foreign-owned firms achieved the highest relative value capture, offshore firms secured the largest absolute value. The results indicate that legal protection and international reputation, rather than tax avoidance, may be important motives for offshore registration in this industry.