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The Impact of Illicit Financial Flow on Economic Growth of Ethiopia

Author

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  • Alula Nerea

Abstract

The objective of this study was to investigate the impact of Illicit Financial Flow (IIF) on economic growth of Ethiopia. The study used secondary data, particularly from 2000 to 2015 years. It has also employed varies internationally recognized estimation models (Hot Money Narrow and Trade miss-invoicing) to get the magnitude of Illicit Financial Flow in Ethiopia. Moreover, it employed error correction model to get a short and long run velocity and magnitudinal effect of IFF on Gross Domestic Product (GDP). The study found that IFF has significant and negative impact on GDP. Based on research findings, establishing controlling and auditing mechanisms for trans-boundary trade activities in Ethiopia, creating effective institution and building collaborative approach are recommended to curb the magnitude of IFF and its impact on economic growth.

Suggested Citation

  • Alula Nerea, 2018. "The Impact of Illicit Financial Flow on Economic Growth of Ethiopia," Working Papers 2018107, University of Ferrara, Department of Economics.
    • Handle: RePEc:udf:wpaper:2018107
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    More about this item

    Keywords

    IFF; HMN; ECM; Trade Miss-invoicing;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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