Capital Flight Accounting and Welfare Implications in the MENA Region
AbstractThis research brings together the first estimates of capital flight in the MENA countries from 1970 to 2002. In addition, it explains the nature, volume, determinants and growth impact of capital flight in the resource-based and the resource-poor economies of the MENA region on the basis of their respective structural and institutional characteristics. Our findings suggest that capital flight follows a systematic pattern depending on whether a MENA country is resource-based. The resource-based economies are found to be net creditors to the world economy and have experienced more than 273 billion of 1995 USD in capital flight (average of 9.42 percent of GDP). In these economies, capital flight is assisted by natural resource exporting rents, the outward orientation of most economies and the monarchial character of most of their political systems. In assessing the welfare impact, capital flight is shown to negatively and significantly affect economic growth in the resource-based economies. In contrast, the nonresource economies are shown to have experienced a net inflow of an unrecorded foreign exchange of $215 billion in 1995 USD (average of 9.38 percent of GDP). These inflows are mainly reflected in smuggling of imported goods to avoid trade taxes and regulations and are assisted by the inward-looking strategies, one-party or militarily controlled governments and the relatively significant capital controls in these economies. Interestingly, while capital flight is an outcome of government control in resource-based economies, increasing government control induces unrecorded foreign exchange inflows in the resource-poor economies. However, we find no significant effect of unrecorded inflows on economic growth in these economies. Based on these findings, the research provides policy implications for development in the MENA region.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by De Gruyter in its journal Review of Middle East Economics and Finance.
Volume (Year): 4 (2008)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.degruyter.com
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hassan Gholipour Fereidouni & Tajul Ariffin Masron & Reza Ekhtiari Amiri, 2011. "The effects of FDI on voice and accountability in the MENA region," International Journal of Social Economics, Emerald Group Publishing, vol. 38(9), pages 802-815, August.
- Arnaud Bourgain & Patrice Pieretti & Skerdilajda Zanaj, 2011. "Financial openness, disclosure and bank risk-taking in MENA countries," CREA Discussion Paper Series 11-11, Center for Research in Economic Analysis, University of Luxembourg.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.