Capital flight, tax revenue and economic growth in Sub-Saharan Africa: the role of good governance

James Peprah, Harold Ngalawa and Evelyn Derera

International Journal of Economic Policy in Emerging Economies, 2023, vol. 17, issue 3, 444-464

Abstract: The study examines the moderating role of good governance indicators in the capital flight, tax revenue and economic growth relationship in 28 SSA countries. The data for the study spans from 1996 to 2018, and dynamic panel estimators were employed for the data analysis. As expected, the findings indicate that capital flight hinders economic growth in SSA whiles increasing tax revenue promotes growth. However, the effects of both capital flight and tax revenue on economic growth in sub-Saharan Africa are moderated by good governance indicators. In other words, with good governance, the drainage effect of capital flight on economic growth reduces significantly and the growth enhancing effect of domestic revenue mobilisation is increased. It is concluded, therefore, that policies that strengthen good governance are essential for Africa's growth prospects.

Keywords: capital flight; good governance; economic growth; Sub-Saharan Africa. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijepee:v:17:y:2023:i:3:p:444-464

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