George Town
George Town exhibits regulatory niche specialization like cleaner fish: 55% of Cayman GDP flows through a district that converted tax arbitrage into systemic financial infrastructure.
George Town demonstrates how regulatory arbitrage can transform a Caribbean backwater into a global financial hub. When Barclays opened the first commercial bank here in 1953, this was a mosquito-ridden settlement where turtle fishing remained the primary occupation. The 1966 banking and trust laws created the substrate, but the real transformation came in 1973 when the Bahamas gained independence and nervous investors sought a stable British jurisdiction nearby. George Town inherited the Bahamas' fleeing capital like a cleaner fish inheriting clients from a disappeared competitor.
The numbers reveal extraordinary niche specialization: financial services now represent 55% of GDP, 40% of government revenue, and 36% of employment. More than 9,500 funds operate under license. Every major global law firm and all Big Four accounting firms maintain substantial offices in a town of fewer than 35,000 people. This concentration resembles mutualistic networks in coral reefs, where specialized service providers cluster because the ecosystem supports their specific needs.
George Town's path-dependence is now deeply embedded. The absence of income, corporate, capital gains, or inheritance taxes isn't an oversight but a deliberate niche construction that attracts capital flows from higher-tax jurisdictions. Yet this creates vulnerability: regulatory pressure from the EU and OECD on tax transparency threatens the very conditions that enabled growth. The district's 2.9% Q1 2025 GDP expansion shows continued vitality, but like any highly specialized organism, George Town's fortunes depend entirely on its regulatory niche remaining viable in a changing global environment.