External Debt and Capital Flight in the Indian Economy

Niranjan Chipalkatti and Meenakshi Rishi

Oxford Development Studies, 2001, vol. 29, issue 1, 31-44

Abstract: This paper estimates Indian capital flight at US $88 billion (in 1997 dollars) over the 1971-97 period, a sum that is roughly 20% of the US $448 billion real external debt disbursed to the country over the same time period. There is also evidence of a strong year-to-year correlation between debt inflows and flight-capital outflows. The paper explores the nature of this association between capital flight and external debt in the Indian economy. An analysis by Boyce (1992, World Development, 20, pp. 335-349) for the Philippines revealed the presence of contemporaneous bi-directional causality, in other words, a financial revolving door relationship between external debt and capital flight in that economy. The research question addressed by this paper is whether such a financial revolving door relationship exists in India, given its higher level of external indebtedness and lower debt-to-GNP ratio as compared with the Philippines. Utilizing a simultaneous equation model to examine the association between capital flight and external debt in the Indian economy, the paper confirms the existence of a financial revolving door relationship between the two endogenous variables.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13600810124596 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oxdevs:v:29:y:2001:i:1:p:31-44

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CODS20

DOI: 10.1080/13600810124596

Access Statistics for this article

Oxford Development Studies is currently edited by Jo Boyce and Frances Stewart

More articles in Oxford Development Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().