Risk and Capital Flight in Developing Countries

International Monetary Fund

No 1990/064, IMF Working Papers from International Monetary Fund

Abstract: The risks of large capital losses on the domestic assets of developing countries resulting from expropriation, inflation, or devaluations are identified as the major causes of capital flight. The combination of large foreign loans and capital flight from developing countries during the 1970s and early 1980s reflected different perceptions of domestic residents and foreign lenders regarding the risks of holding domestic assets. However, the debt crisis reduced these differences in perceived risks, and resulted in a decline of foreign loans coupled with continuation of capital flight. If sound macroeconomic and structural policies can reduce those risks, they can also stem capital flight.

Keywords: WP; capital flight; debt; capital; increases in capital capital flight; control; debt-servicing problem; world debt table; capital flight in ratio; stemming capital flight; reducing capital flight; scale capital flight; continuation of capital flight; Capital outflows; Debt default; Capital controls; Capital inflows; Global (search for similar items in EconPapers)
Pages: 26
Date: 1990-01-01
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Citations: View citations in EconPapers (3)

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