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On the determinants of capital flight from Russia

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  • Marcella Mulino

Abstract

The paper addresses the problem of defining and assessing the scale of capital flight from Russia and of briefly reviewing the channels through which capital, both of legal and illegal origin, illegally leaves Russia. It then highlights the determinants of Russian capital flight, as the traditional view of a reaction to divergences among real domestic and foreign returns and to economic and political risks proves inadequate. More important factors are linked to specific features of the transition process under way, that is macroeconomic instability and variability of government policies, weak protection of property rights and savings, a fragile banking system limiting access to investment finance, high and unevenly enforced taxes, a large share of unofficial activities, and considerable levels of corruption. Copyright International Atlantic Economic Society 2002

Suggested Citation

  • Marcella Mulino, 2002. "On the determinants of capital flight from Russia," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(2), pages 148-169, June.
  • Handle: RePEc:kap:atlecj:v:30:y:2002:i:2:p:148-169
    DOI: 10.1007/BF02299159
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    References listed on IDEAS

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    1. Michael P. Dooley & Kenneth M. Kletzer, 1994. "Capital flight, external debt, and domestic policies," Economic Review, Federal Reserve Bank of San Francisco, pages 29-37.
    2. Michael P. Dooley, 1988. "Capital Flight: A Response to Differences in Financial Risks," IMF Staff Papers, Palgrave Macmillan, vol. 35(3), pages 422-436, September.
    3. D. Reisman, 1999. "Russia's Tax Crisis: Explaining Falling Revenues in a Transitional Economy," Economics and Politics, Wiley Blackwell, vol. 11(2), pages 145-169, July.
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    5. Assaf Razin & Efraim Sadka, 1989. "Optimal Incentives to Domestic Investment in the Presence of Capital Flight," NBER Working Papers 3080, National Bureau of Economic Research, Inc.
    6. BRUNETTI, AYMO AART OLIVER & Kisunko,Gregory & Weder,Beatrice Silvia, 1997. "Institutional obstacles to doing business : region-by-region results from a worldwide survey of the private sector," Policy Research Working Paper Series 1759, The World Bank.
    7. Collier, Paul & Hoeffler, Anke & Pattillo, Catherine, 1999. "Flight capital as a portfolio choice," Policy Research Working Paper Series 2066, The World Bank.
    8. Feige, Edgar L., 1990. "Defining and estimating underground and informal economies: The new institutional economics approach," World Development, Elsevier, vol. 18(7), pages 989-1002, July.
    9. repec:taf:ceasxx:v:50:y:1998:i:1:p:27-49 is not listed on IDEAS
    10. A. Abalkin & J. Whalley, 1999. "The Problem of Capital Flight from Russia," The World Economy, Wiley Blackwell, vol. 22(3), pages 421-444, May.
    11. repec:taf:ceasxx:v:49:y:1997:i:4:p:591-615 is not listed on IDEAS
    12. Nathan Sheets, 1995. "Capital flight from the countries in transition: some theory and empirical evidence," International Finance Discussion Papers 514, Board of Governors of the Federal Reserve System (U.S.).
    13. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    14. Terry Sicular, 1998. "Capital Flight and Foreign Investment: Two Tales From China and Russia," The World Economy, Wiley Blackwell, vol. 21(5), pages 589-602, July.
    15. Lisa M. Schineller, 1997. "An econometric model of capital flight from developing countries," International Finance Discussion Papers 579, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Laura Taylor & Mary Wrenn, 2003. "Forging new relationships: Social capital in the transistion," Forum for Social Economics, Springer;The Association for Social Economics, vol. 33(1), pages 1-11, September.
    2. Chin-Hong Puah & Albert Apoi & Jerome Swee-Hui Kueh, 2008. "Outward FDI of Malaysia: An Empirical Examination from Macroeconomic Perspective," Economics Bulletin, AccessEcon, vol. 6(28), pages 1-11.
    3. Svetlana Ledyaeva & Päivi Karhunen & John Whalley, 2013. "If Foreign Investment Is not Foreign: Round-Trip Versus Genuine Foreign Investment in Russia," Working Papers 2013-05, CEPII research center.
    4. 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.

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