Debt and capital flight

James K. Boyce and Léonce Ndikumana

Chapter 15 in Handbook of Globalisation and Development, 2017, pp 251-271 from Edward Elgar Publishing

Abstract: Many developing countries have experienced large-scale capital flight at the same time as they were borrowing from external creditors. The dual phenomena of external debt and capital flight raise important questions. Why does capital flee developing countries even as foreign creditors continue to lend to them? Is there a link between inflows of borrowed money and outflows of capital flight? If so, what is the connection? Simultaneous external borrowing and capital flight reflect perverse incentive structures on both sides of the transactions that foster behaviour that is harmful from the standpoint of the borrowing country and, if the borrower ultimately cannot repay, from the standpoint of creditor institutions as well. Strategies to address the problem of capital flight must include mechanisms to curtail corruption, recover stolen assets, relieve the burdens of external debts, and promote transparency and due diligence in banks and other financial institutions. If well designed and rigorously implemented, such initiatives can curtail malfeasance, improve incentive structures, and contribute to a more efficient and equitable international financial architecture.

Keywords: Development Studies; Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.elgaronline.com/view/9781783478644.00023.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

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:elg:eechap:15966_15

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().