Governance and the Capital Flight Trap in Africa

Simplice Asongu () and Joseph Nnanna ()
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Simplice Asongu: Yaoundé, Cameroon
Joseph Nnanna: Abuja, Nigeria

No 20/022, Journal of Africa SEER Centre(ASC) from Africa SEER Centre(ASC)

Abstract: The study examines the use of governance tools to fight capital flight by reducing the capital flight trap. Two overarching policy syndromes are addressed in the study. It first assesses whether governance is an effective deterrent to the capital flight trap in Africa, before examining what thresholds of government quality are required to fight the capital flight trap in the continent. The following findings are established. Evidence of a capital flight trap is apparent because past values of capital flight have a positive effect on future values of capital flight. The net effects from interactions of the capital flight trap with political stability, regulation quality, economic governance and corruption-control on capital flight are positive. The critical masses at which “voice & accountability†and regulation quality can complement the capital flight trap to reduce capital flight are respectively, 0.120 and 0.680, which correspond to the best performing countries. Policy implications are discussed.

Keywords: governance; capital flight; capital flight trap; Africa (search for similar items in EconPapers)
JEL-codes: C50 E62 F34 O55 P37 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2020-01
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Forthcoming in Transnational Corporations Review

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https://africaseercentre.org/publications/RePEc/db ... t-Trap-in-Africa.pdf Revised version, 2020 (application/pdf)

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