The Incidence of Capital Flight in an African Open Economy

Abstract

This study investigated the incidence of capital flight in Nigeria. A combination of the push factors theory and the portfolio risk approach was employed. The policy and economic environments and political developments were suspected enabling factors. The analysis was confined to the short run in order to avoid the ambiguity inherent in the long run effects of some explanatory variables. Following from the preliminary data analysis, estimates were provided for non-ratio and ratio specifications. Whereas the overall goodness of fit was very impressive under the two specifications, particular variables’ performances were somewhat converse. However, a common denominator emerged from the results to tip off policy direction.