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How Terrorism Explains Capital Flight from Africa

Author

Listed:
  • Uchenna EFOBI

    () (Covenant University, Nigeria)

  • Simplice Asongu

    () (Yaoundé/Cameroun)

Abstract

We assess the effects of terrorism on capital flight in a panel of 29 African countries for which data is available for the period 1987-2008. The terrorism dynamics entail domestic, transnational, unclear and total terrorisms. The empirical evidence is based on Generalised Method of Moments (GMM) with forward orthogonal deviations and Quantile regressions (QR). The following findings are established. First, for GMM, domestic, unclear and total terrorisms consistently increase capital flight, with the magnitude relative higher from unclear terrorism. Second, for QR: (i) the effect of transnational terrorism is now positively significant in the top quantiles (0.75th and 0.90th) of the capital flight distribution, (ii) domestic and total terrorisms are also significant in the top quantiles and (iii) unclear terrorism is significant in the 0.10th and 0.75th quantiles. Policy implications are discussed.

Suggested Citation

  • Uchenna EFOBI & Simplice Asongu, 2015. "How Terrorism Explains Capital Flight from Africa," Working Papers 15/034, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:15/034
    as

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    References listed on IDEAS

    as
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    Keywords

    Capital flight; terrorism; Africa;

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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