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The Nexus between Capital Flight and Income Inequality in Developing Countries

Author

Listed:
  • Francois Xavier Ngah Obama

    (University of Yaoundé II, Yaounde, Cameroon)

  • Hans Tino Mpenya Ayamena

    (University of Douala, Douala, Cameroon)

  • Francis Menjo Baye

    (University of Yaoundé II, Yaounde, Cameroon)

Abstract

This study examines the relationship between capital flight and income inequality in 49 developing countries from 2000 to 2014. The study applies the bias-corrected method of moments and the method of moments quantile regression. We find that capital flight associates positively and significantly with income inequality. These results are heterogeneous across the conditional quantile distribution of income inequality. The quantile-specific results show that the income inequality increasing effect of capital flight is limited between the 10th and the 40th percentiles. These findings suggest that policy actions that mitigate capital flight would be effective in reducing income inequality, as well as other forms of inequality.

Suggested Citation

  • Francois Xavier Ngah Obama & Hans Tino Mpenya Ayamena & Francis Menjo Baye, 2026. "The Nexus between Capital Flight and Income Inequality in Developing Countries," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 51(2), pages 69-88, June.
    • Handle: RePEc:ris:jecdev:023038
    DOI: 10.35866/caujed.2026.51.2.004
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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F10 - International Economics - - Trade - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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