IDEAS home Printed from https://ideas.repec.org/a/rfa/aefjnl/v4y2017i6p17-26.html
   My bibliography  Save this article

New Analysis of Capital Flight from Saudi Arabia: The Relation with Long-Term Economic Performance

Author

Listed:
  • Abdullah Hussein Almounsor

Abstract

This research provides new estimates of illicit capital flight from Saudi Arabia using the Residual methodology and accounts for the social opportunity cost of those unregulated funds in terms of forgone economic growth by utilizing the Incremental Capital-Output Ratio (ICOR) approach. The empirical findings reveal that over the period 1971-2015, capital flight from Saudi Arabia reached over 212 billion of 2010 USD, causing an annual average of 3.57 percent of wasted potential additional economic growth for the same period. When considering the median instead, an incremental 1.72 percent would have been added annually to the aggregate output growth in Saudi Arabia had capital flight not taken place with the observed pattern during the analysis period. The research concludes with important suggestions for extending this work and crucial remarks for policymakers to tackle unregulated cross-border capital flows and minimize the related consequences. Critical policy measures include coordination with trading partners and key investment destination for Saudi capital flows, as well as strengthening of the regulatory framework for cross-border financial transactions based on best international practices.

Suggested Citation

  • Abdullah Hussein Almounsor, 2017. "New Analysis of Capital Flight from Saudi Arabia: The Relation with Long-Term Economic Performance," Applied Economics and Finance, Redfame publishing, vol. 4(6), pages 17-26, November.
    • Handle: RePEc:rfa:aefjnl:v:4:y:2017:i:6:p:17-26
    as

    Download full text from publisher

    File URL: http://redfame.com/journal/index.php/aef/article/view/2656/2911
    Download Restriction: no
    File URL: http://redfame.com/journal/index.php/aef/article/view/2656
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Beja, Edsel Jr., 2007. "Capital Flight and Economic Performance," MPRA Paper 4885, University Library of Munich, Germany, revised 12 Sep 2007.
    2. Mr. Simeon Inidayo Ajayi, 1997. "An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa," IMF Working Papers 1997/068, International Monetary Fund.
    3. Léonce Ndikumana & James Boyce, 2000. "Is Africa a Net Creditor? New Estimates of Capital Flight from Severely Indebted Sub-Saharan African Countries, 1970-1996," Working Papers wp5, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Almounsor Abdullah, 2008. "Capital Flight Accounting and Welfare Implications in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 4(2), pages 1-67, April.
    5. Léonce Ndikumana & James Boyce, 2010. "Measurement of Capital Flight: Methodology and Results for Sub-Saharan African Countries," African Development Review, African Development Bank, vol. 22(4), pages 471-481.
    6. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heydari, Hassan & Jariani, Farzaneh, 2020. "Analyzing Effective Factors of Capital Outflow from the Middle East and North African Countries (MENA)," MPRA Paper 104547, University Library of Munich, Germany.
    2. repec:dgr:rugsom:14031-eef is not listed on IDEAS
    3. Hajer Dachraoui & Mounir Smida & Maamar Sebri, 2020. "Role of capital flight as a driver of sovereign bond spreads in Latin American countries," International Economics, CEPII research center, issue 162, pages 15-33.
    4. Almounsor Abdullah, 2008. "Capital Flight Accounting and Welfare Implications in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 4(2), pages 1-67, April.
    5. Hermes, Niels & Lensink, Robert, 2014. "Financial liberalization and capital flight," Research Report 14031-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    6. Léonce Ndikumana, 2013. "The Private Sector as Culprit and Victim of Corruption in Africa," Working Papers wp330, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Niels Hermes & Robert Lensink & Victor Murinde, 2002. "Flight Capital and its Reversal for Development Financing," WIDER Working Paper Series DP2002-99, World Institute for Development Economic Research (UNU-WIDER).
    8. Brausmann, Alexandra & Bretschger, Lucas, 2018. "Economic development on a finite planet with stochastic soil degradation," European Economic Review, Elsevier, vol. 108(C), pages 1-19.
    9. Johnny Flentø, 2021. "Ending Poverty in All its Forms Everywhere," DERG working paper series 21-13, University of Copenhagen. Department of Economics. Development Economics Research Group (DERG).
    10. Boukraine, Wissem, 2020. "The finance-inequality nexus in the BRICS countries: evidence from an ARDL bound testing approach," MPRA Paper 101976, University Library of Munich, Germany.
    11. Kym Anderson & Kimie Harada, 2019. "How Much Wine Is Really Produced and Consumed in China, Hong Kong, and Japan?," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 15, pages 379-404, World Scientific Publishing Co. Pte. Ltd..
    12. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    13. Njangang, Henri & Nembot Ndeffo, Luc & Noubissi Domguia, Edmond & Fosto Koyeu, Prevost, 2018. "The long-run and short-run effects of foreign direct investment, foreign aid and remittances on economic growth in African countries," MPRA Paper 89747, University Library of Munich, Germany.
    14. Ehigiamusoe, Kizito Uyi & Lean, Hooi Hooi & Smyth, Russell, 2020. "The moderating role of energy consumption in the carbon emissions-income nexus in middle-income countries," Applied Energy, Elsevier, vol. 261(C).
    15. Ahmed Abdullahi D., 2011. "International Financial Integration, Investment and Economic Performance in Sub-Saharan African Countries," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-28, December.
    16. Théo Benonnier & Katrin Millock & Vis Taraz, 2022. "Long-term migration trends and rising temperatures: the role of irrigation," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 11(3), pages 307-330, July.
    17. Chakraborty, Adrij, 2017. "Colonial Origins and Comparative Development: Institutions Matter," MPRA Paper 86320, University Library of Munich, Germany, revised Feb 2018.
    18. Elert, Niklas & Henrekson, Magnus, 2017. "Entrepreneurship and Institutions: A Bidirectional Relationship," Working Paper Series 1153, Research Institute of Industrial Economics, revised 05 May 2017.
    19. Oludele Emmanuel Folarin, 2019. "Financial reforms and industrialisation: evidence from Nigeria," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 166-189, June.
    20. Klagge Britta & Zademach Hans-Martin, 2018. "International capital flows, stock markets, and uneven development: the case of Sub-Saharan Africa and the Sustainable Stock Exchanges Initiative (SSEI)," ZFW – Advances in Economic Geography, De Gruyter, vol. 62(2), pages 92-107, May.
    21. Arif Ullah & Kashif Raza & Muhammad Nadeem & Usman Mehmood & Ephraim Bonah Agyekum & Mohamed F. Elnaggar & Ebenezer Agbozo & Salah Kamel, 2022. "Does Globalization Cause Greenhouse Gas Emissions in Pakistan? A Promise to Enlighten the Value of Environmental Quality," IJERPH, MDPI, vol. 19(14), pages 1-17, July.

    More about this item

    Keywords

    capital flight; economic growth; Saudi Arabia; ICOR; the Residual approach;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfa:aefjnl:v:4:y:2017:i:6:p:17-26. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Redfame publishing (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.