One Bad Turn Deserves Another: How Terrorism Sustains the Addiction to Capital Flight in Africa

Asongu, Simplice A.; Nting, Rexon T.; Osabuohien, Evans

doi:10.1007/s10842-019-00303-6

Cited by 16 publications

(8 citation statements)

References 85 publications

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“…There is a paradox between the increasing capital flight from Africa and the substantially documented need of finance for the continent's growing ambitions. On the one hand, the continent is a net creditor to the rest of the world because her capital outflows substantially surpass corresponding capital inflows (Boyce & Ndikumana, 2012a;Asongu et al, 2019). For instance, according to the narrative, thirty-three countries in sub-Saharan Africa (SSA) lost approximately 814 billion US Dollars (in constant of 2010 terms) between 1970 and 2010, to capital flight.…”

Section: Introductionmentioning

confidence: 99%

Governance and the capital flight trap in Africa

Asongu

Nnanna²

2020

Transnational Corporations Review

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The study examines the use of governance tools to fight capital flight by reducing the capital flight trap. Two overarching policy syndromes are addressed in the study. It first assesses whether governance is an effective deterrent to the capital flight trap in Africa, before examining what thresholds of government quality are required to fight the capital flight trap in the continent. The following findings are established. Evidence of a capital flight trap is apparent because past values of capital flight have a positive effect on future values of capital flight. The net effects from interactions of the capital flight trap with political stability, regulation quality, economic governance and corruption-control on capital flight are positive. The critical masses at which "voice & accountability" and regulation quality can complement the capital flight trap to reduce capital flight are respectively, 0.120 and 0.680, which correspond to the best performing countries. Policy implications are discussed.

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Section: Introductionmentioning

confidence: 99%

Governance and the capital flight trap in Africa

Asongu

Nnanna²

2020

Transnational Corporations Review

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“…The effects of socio-political and institutional factors, such as military expenditure, terrorism, political instability, corruption control on capital flight were considered in the studies of Efobi and Asongu (2016), Asongu and Amankwah-Amoah (2018), Asongu et al (2019), Osei-Assibey et al ( 2017), and Asongu and Nnanna (2020), respectively. Generally, they provided evidence of the effects of these non-economic factors on capital flight in Sub-Saharan African countries at one time or the other.…”

Section: Literature Reviewmentioning

confidence: 99%

Fighting capital flight in Nigeria: have we considered global uncertainties and exchange rate volatilities? Fresh insights via quantile ARDL model

Uche

Effiom

2021

SN Bus Econ

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This study aims to fill the observed gap in the literature related to capital flight and its determinants. Following this observation, the main objective of the current effort is to unravel the potential influence of global economic policy uncertainties and exchange rate deviations on capital flight. Annual time series data between 1970 and 2015 were used for empirical investigations through the application of the newly introduced quantile autoregressive distributed lag model. Following this extensive investigation, the following evidence emerged. A long-run relationship exists between global economic uncertainties, exchange rate volatilities, and capital flight in Nigeria. Second, we discover that the effects of exchange rate volatility and global uncertainty are sensitive to different quantiles of capital flight distributions. Third, capital flight shows strong evidence of hysteresis in all quantiles. This makes capital flight a systemic problem as past capital flight induces more capital flight. In addition, we found evidence of long-run distributional asymmetric effects between the past values of capital flight and that of economic growth on capital flight. In addition, exchange rate and GDP, rather than global uncertainty are the major determinants of capital flight in Nigeria in terms of their significant positive long-term impacts on capital flight in all quantiles of capital flight distributions. Therefore, if the fight against capital migration must be won in Nigeria and other countries facing similar challenges, stabilization of the exchange rate, among other things is paramount. In addition, due to the presence of distributional asymmetric effects, a one-size-fits all policy may not be helpful. The overall findings have strong policy implications for the fight against capital flight.

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“…The functional form is given below; + + + The strategy of GMM, which will be used here, is adapted from (Simplice A. Asongu, et al, 2019). In step 2 on analysis, the impact of capital flight is checked on the economic performance of developing countries, and for that GLS (Generalized Least Square) technique is used; functional form is given below; The current account balance is a sum of net exports goods and services, net primary income, and net secondary income.…”

Section: Methodsmentioning

confidence: 99%

“…some studies have shown it as a most disturbing element for the investors, and they shift their assets abroad by any means (Efobi & Asongu, 2016), (Simplice A. Asongu, et al, 2019) and (Hyder, Akram, & Padda, 2015). Third, the reason is to analyze the association of Economic freedom and capital flight.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Campital Flight and its Impact on Economic Performance: A Study of Developming Economies

Nasreen

Raheman

Mirza

2021

NRJSS

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Capital flight imposes a great danger to the developing economies by lowering their economic activity, devaluing the currency, and hindering economic growth. This paper contributes to the literature by investigating the determinants of capital flight of developing economies. Determinants are studied as indices, and these indices are calculated by using the Arithmetic Mean approach. There is a two-steps model; in the first part, determinants are discussed, and in the second part, capital flight is used as an independent variable, and its impact on economic performance is measured in 59 Developing Economies. GMM (Generalized Method of Moments) is used for the determinants of capital flight, and panel GLS (Generalized least square) is used to check the impact of capital flight on economic performance. Macroeconomic variables (external debt, inflation, exports, interest rate, and exchange rate) are also part of the study with four indices as determinants (Country Risk Index, Economic Freedom Index, financial inclusion index, and Governance institution and corruption index). Results suggest that all included indices were significant along with all macroeconomic variables. Country risk, external debt, and exports have a negative coefficient, while others have a positive coefficient value. Capital investment, foreign direct investment, and Gross domestic product were used as proxies of economic performance. Results of GLS have shown there is a significant and negative impact of capital flight on economic performance. Capital flight is measured by using the residual methodology.

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One Bad Turn Deserves Another: How Terrorism Sustains the Addiction to Capital Flight in Africa

Cited by 16 publications

References 85 publications

Governance and the capital flight trap in Africa

Governance and the capital flight trap in Africa

Fighting capital flight in Nigeria: have we considered global uncertainties and exchange rate volatilities? Fresh insights via quantile ARDL model

Determinants of Campital Flight and its Impact on Economic Performance: A Study of Developming Economies

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