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What is Capital Flight?

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  • Chander Kant

Abstract

This paper offers a definitive distinction between capital flight and capital outflows. It unifies and synthesises the capital flight concept as used in both theoretical and empirical work and shows that various definitions have two common elements. These are: (1) capital flight is a subset of capital outflows from developing countries by its residents; (2) these outflows must be motivated by risks and uncertainties that are peculiar to developing countries. The former points to the counter‐intuitive nature of these outflows. The latter gives these counterintuitive outflows’ explanation. We then propose an econometric method to measure this concept, and illustrate its use by applying it to Korea.

Suggested Citation

  • Chander Kant, 2002. "What is Capital Flight?," The World Economy, Wiley Blackwell, vol. 25(3), pages 341-358, March.
    • Handle: RePEc:bla:worlde:v:25:y:2002:i:3:p:341-358
    DOI: 10.1111/1467-9701.00436
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    Cited by:

    1. Jeffrey Kurebwa, 2021. "Implications of Illicit Financial Flows on Zimbabwe's Development," International Journal of World Policy and Development Studies, Academic Research Publishing Group, vol. 7(2), pages 27-34, 06-2021.
    2. Raghbendra Jha & T. Palanivel, 2007. "Resource Augmentation for Meeting the Millennium Development Goals in the Asia Pacific Region," ASARC Working Papers 2007-02, The Australian National University, Australia South Asia Research Centre.
    3. Kant, Chander, 2005. "Capital mobility among advanced countries," Journal of Policy Modeling, Elsevier, vol. 27(9), pages 1067-1081, December.
    4. Perez, M. Fabricio & Brada, Josef C. & Drabek, Zdenek, 2012. "Illicit money flows as motives for FDI," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 108-126.
    5. Beja Jr, Edsel, 2010. "Balance of Payments-consistent unreported flows," MPRA Paper 21699, University Library of Munich, Germany.
    6. Onour, Ibrahim & Cameron, Norman, 1997. "Parallel Market Premia and Misalignment of Official Exchange Rates," MPRA Paper 15537, University Library of Munich, Germany.
    7. Ramos, Miguel A. & Ashby, Nathan J., 2013. "Heterogeneous firm response to organized crime: Evidence from FDI in Mexico," Journal of International Management, Elsevier, vol. 19(2), pages 176-194.
    8. Ivan LUCHIAN & Victoria IORDACHI, 2018. "Illicit Financial Flows And Corruption - The Actual Major Problem," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 3(4), pages 83-92.
    9. Ibrahim A. Onour & Bruno S. Sergi, 2021. "The impact of a political shock on foreign exchange markets in a small and open economy: A dynamic modelling approach," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 10(3), pages 137-152.
    10. Yin‐Wong Cheung & XingWang Qian, 2010. "Capital Flight: China's Experience," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 227-247, May.
    11. Léonce Ndikumana, 2016. "Causes and Effects of Capital Flight from Africa: Lessons from Case Studies," African Development Review, African Development Bank, vol. 28(S1), pages 2-7, April.
    12. Onour, Ibrahim, 2011. "Financial stability in small open economy under political uncertainty," MPRA Paper 29883, University Library of Munich, Germany.
    13. Bebonchu Atems & John K Mullen, 2016. "Outward FDI from the USA and host country financial transparency," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(8), pages 1122-1143, November.
    14. Brada, Josef C. & Kutan, Ali M. & Vukšić, Goran, 2013. "Capital Flight in the Presence of Domestic Borrowing: Evidence from Eastern European Economies," World Development, Elsevier, vol. 51(C), pages 32-46.
    15. Onour, Ibrahim, 2010. "South Sudan Referundum: A Macroeconomic Analysis of Post-Secession Scenario," MPRA Paper 29897, University Library of Munich, Germany.
    16. Sadik, Ali T. & Bolbol, Ali A., 2003. "Arab External Investments: Relation to National Wealth, Estimation, and Consequences," World Development, Elsevier, vol. 31(11), pages 1771-1792, November.
    17. Josef Brada & Ali Kutan & Goran Vukšić, 2011. "The costs of moving money across borders and the volume of capital flight: the case of Russia and other CIS countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 717-744, November.
    18. Ahmed Imran Hunjra & Hasnain Mehmood & Haroon Bakari, 2018. "Co-Movement between Macroeconomic Variables and Capital Flight," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(9), pages 1185-1195, September.

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