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Greed of the elite; capital flight from a fragile country: case of Burundi

Author

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  • Arcade Ndoricimpa

Abstract

Purpose - This study aims to undertake an institutional analysis of capital flight and examine the drivers of capital flight from Burundi. Design/methodology/approach - Given the episodes of political instability and poor governance which have characterized Burundi’s landscape in the past decades, coupled with macroeconomic instability which has been prevailing, political, economic and institutional factors are used to explain the trend and magnitude of capital flight which were recorded. An econometric analysis using robust least squares is also used to examine the determinants of capital flight from Burundi. Findings - The estimation results seem to be sensitive to capital flight measurement used, but in general, they suggest that external debt, political instability and wars, as well as exports, are the main drivers of capital flight from Burundi. Research limitations/implications - The findings of this study imply that to discourage capital flight, the government of Burundi should promote peace and political stability. In addition, more responsibility, more transparency and accountability are required from the government of Burundi in managing resources from external debt. Moreover, some actions are needed to fight trade misinvoicing, which was seen to be a major channel of capital flight from Burundi. It is however to be acknowledged that our econometric analysis results might not be robust because of data limitations related to data availability on capital flight for only the period 1985-2013. Originality/value - This study contributes to the existing capital flight literature in two ways. First, by undertaking the first ever country-specific study focusing on Burundi, and second, by undertaking an institutional analysis of capital flight to understand the political, economic and institutional issues behind capital flight from Burundi. The focus in this study is on Burundi because of the burden that capital flight imposes on the country already impoverished.

Suggested Citation

  • Arcade Ndoricimpa, 2018. "Greed of the elite; capital flight from a fragile country: case of Burundi," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 25(2), pages 598-618, May.
    • Handle: RePEc:eme:jfcpps:jfc-11-2016-0075
    DOI: 10.1108/JFC-11-2016-0075
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    More about this item

    Keywords

    Burundi; Capital flight; Drivers of Capital flight; Fragile country; C22; F21; O16;
    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
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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