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Recent estimates of capital flight

Author

Listed:
  • Claessens, Stijn
  • Naude, David

Abstract

Researchers and policymakers have in recent years paid considerable attention to the phenomenon of capital flight. Researchers have focused on four questions: What concept should be used to measure capital flight? What figure for capital flight will emerge, using this measure? Can the occurrence and magnitude of capital flight be explained by certain (economic) variables? What policy changes can be useful to reverse capital flight? The authors focus strictly on presenting estimates of capital flight using a number of alternative methodologies. In their discussion of these methodologies, they show that although the approaches to measuring capital flight differ, the identities used in balance of payment data make them close in final measurement. In particular, the so-called World Bank residual and Dooley methods - presented in the past as very different approaches to measuring capital flight - actually produce similar measurements. The authors discuss the data used for calculating capital flight and the adjustment that must be made. They present aggregate capital flight figures using the various measures for 84 developing countries. The figures show a pattern of increasing capital flight until 1988, followed by a return of flight capital between 1989 and 1991. The authors present regional aggregates of capital flight and rank countries and regions by the level of capital flight relative to GDP. They find that capital flight is more widespread than commonly assumed and, relative to GDP, is rather evenly distributed. The capital flight-GDP Lorenz curve is above the 45-degree line, indicating that countries with a smaller GDP have more capital flight than one would expect if it were distributed proportionate to GDP.

Suggested Citation

  • Claessens, Stijn & Naude, David, 1993. "Recent estimates of capital flight," Policy Research Working Paper Series 1186, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1186
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    Citations

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    Cited by:

    1. Aizenman, Joshua, 2008. "On the hidden links between financial and trade opening," Journal of International Money and Finance, Elsevier, vol. 27(3), pages 372-386, April.
    2. Pasricha, Gurnain Kaur, 2008. "Imperfect Competition in Financial Markets and Capital Controls: A Model and a Test," MPRA Paper 12125, University Library of Munich, Germany.
    3. 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.).
    4. Bigsten, Arne, 1998. "Can Aid Generate Growth in Africa?," Working Papers in Economics 3, University of Gothenburg, Department of Economics.
    5. Islam, Roumeen, 2000. "Should capital flows be regulated? - a look at the issues and policies," Policy Research Working Paper Series 2293, The World Bank.
    6. repec:taf:rjapxx:v:14:y:2009:i:4:p:313-330 is not listed on IDEAS
    7. Cheung, Yin-Wong & Steinkamp, Sven & Westermann, Frank, 2016. "China's capital flight: Pre- and post-crisis experiences," Journal of International Money and Finance, Elsevier, vol. 66(C), pages 88-112.
    8. James K. Boyce & Léonce Ndikumana, 2000. "Is Africa a Net Creditor? New Estimates of Capital Flight from Severely Indebted Sub-Saharan African Countries, 1970-1996," UMASS Amherst Economics Working Papers 2000-01, University of Massachusetts Amherst, Department of Economics.
    9. Lensink, Robert & Hermes, Niels & Murinde, Victor, 2000. "Capital flight and political risk," Journal of International Money and Finance, Elsevier, vol. 19(1), pages 73-92, February.
    10. 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.
    11. Anke Hoeffler & Catherine A Pattillo & Paul Collier, 1999. "Flight Capital as a Portfolio Choice," IMF Working Papers 99/171, International Monetary Fund.
    12. Melike Altinkemer, 1996. "Capital Flows : The Turkish Case," Discussion Papers 9601, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    13. Alexander Bulatov, 2001. "Russian Direct Investment Abroad: History, Motives, Finance, Control and Planning," Economic Change and Restructuring, Springer, vol. 34(3), pages 179-194, October.
    14. Basu, Arnab K. & Chau, Nancy H., 2007. "A risk-based rationale for two-way capital flows: Why do capital flights and inward foreign direct investments co-exist?," International Review of Economics & Finance, Elsevier, vol. 16(1), pages 37-59.
    15. Lisa M. Schineller, 1997. "A nonlinear econometric analysis of capital flight," International Finance Discussion Papers 594, Board of Governors of the Federal Reserve System (U.S.).
    16. Afees A. Salisu & Kazeem Isah, 2017. "A Capital Flight-Growth Nexus in Sub-Saharan Africa: The Role of Macroeconomic Uncertainty," Working Papers 034, Centre for Econometric and Allied Research, University of Ibadan.
    17. Hermes, Niels & Lensink, Robert, 2001. "Capital flight and the uncertainty of government policies," Economics Letters, Elsevier, vol. 71(3), pages 377-381, June.
    18. repec:rss:jnljee:v3i1p2 is not listed on IDEAS
    19. Andrew Powell & Dilip Ratha & Sanket Mohapatra, 2002. "Capital Inflows and Capital Outflows: Measurement, Determinants, Consequences," Business School Working Papers veinticinco, Universidad Torcuato Di Tella.
    20. Goran Vuksic, 2010. "Unrecorded capital flows and accumulation of foreign assets: the case of Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 34(1), pages 1-23.
    21. 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.
    22. Niels Johannesen & Jukka Pirttilä, 2016. "Capital flight and development: An overview of concepts, methods, and data sources," WIDER Working Paper Series 095, World Institute for Development Economic Research (UNU-WIDER).
    23. Lensink, Robert & Hermes, Niels & Murinde, Victor, 1998. "The Effect of Financial Liberalization on Capital Flight in African Economies," World Development, Elsevier, vol. 26(7), pages 1349-1368, July.
    24. 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.).

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