MACROECONOMIC IMPACT OF CAPITAL FLIGHT IN SUB-SAHARAN AFRICA

John Weeks

Working Papers from African Economic Research Consortium

Abstract: This paper assesses the impact of capital flight on growth in thirty-one sub-Saharan African countries. It first considers the "macro fundamentals" hypothesis that capital flight would be lower in a country whose government adhered to "sound" macroeconomic policies. Analytical considerations fail to support this hypothesis. Second, it develops a growth estimating equation derived from the Harrod-Domar framework. The growth estimations support the conclusion that capital flight had a major impact on growth over the last three decades, 1980a-2010. The negative impact was greatest for the petroleum-exporting countries and those affected by internal conflict, but it was also substantial for the other countries, with a few exceptions.

Date: 2016-09
Note: African Economic Research Consortium
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Persistent link: https://EconPapers.repec.org/RePEc:aer:wpaper:65b7e975-2f0a-4f16-8b2d-c1ebc1b69bb4

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