Impact of Capital Flight on Public Social Expenditure in Congo‐Brazzaville

Abstract

AbstractThe economic literature has documented that a high level of capital flight affects domestic resource mobilization and development. However, some aspects of the effects of capital flight have not been adequately explored. This study assesses the effect of capital flight on public social expenditure in Congo‐Brazzaville. It shows, through a simulation exercise covering the 2000–2012 period, that the opportunity cost of capital flight translates into substantial losses in health and education expenditures, and thus significantly delays the achievement of the MDGs 4 and 5. This means that policies aimed at curbing capital flight may have a positive effect on the level of spending on health and education.