ILLICIT FINANCIAL FLOW AND ECONOMIC DEVELOPMENT IN NIGERIA

Valentine Igbinedion Osayi and Emmanuel Ken Hilary Idume

Journal of Academic Research in Economics, 2024, vol. 16, issue 2 (July), 428-443

Abstract: The study examined the effects of illicit financial flow on economic development in Nigeria. The study uses Per Capita Income (PCI) as a measure for economic development, while Tax Evasion and Avoidance (TEA), Bribery (BRB) and the Naira value of Contraband (CTB) goods were measures for illicit financial flows. In specific terms, the study hypothesizes that no relationship exists between illicit financial flow and the development of the Nigerian economy. In order that the preceding hypothesized statement is tested empirically, and the stated objective achieved, the study sourced data from the Global Financial Integrity (GFI) Report, the Organization for Economic Cooperation and Development (OECD) and the National Bureau of Statistics (NBS) Quarterly report which spans a period of thirty two (32) years. The study employed descriptive statistics, ADF unit root test for stationarity of the series and the least square method of linear regression in order that the relationship between the dependent and independent variables of the study would be determined. The findings resulting from the empirical analysis carried out on the data revealed that, there is significant positive relationship between illicit financial flow as measured by tax evasion and avoidance and economic development in Nigeria. Flowing from the above findings, the study recommends that the Federal Government of Nigeria (FGN) through its agency in charge of collection of various taxes in Nigeria, in this case, the Federal Inland Revenue Service (FIRS) should formulate policies that would discourage people from engaging in tax evasion such that would benefit the generality of the citizenry.

Keywords: Illicit Financial Flow; Economic Development; Tax Evasion and Avoidance. (search for similar items in EconPapers)
JEL-codes: G O1 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:shc:jaresh:v:16:y:2024:i:2:p:428-443

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