Capital Flight Research Articles

Exploring Chinese human capital flight using university alumni data

ABSTRACT China is one of the major sources of student migrants to many Western countries, growing rapidly during the last couple of decades. In China, several national and regional level policy schemes have been set up to incentivise the return of the high-skilled overseas population. Data to monitor these migration patterns are typically lacking. In this article, we explore the spatial patterns of overseas alumni populations from 106 leading Chinese universities using data gathered from the LinkedIn advertising platform. We first assess the suitability of the LinkedIn data for measuring overseas migrant distributions and then adapt an extended gravity model to aid the interpretation of the relationships between countries, universities and intermediate characteristics and the size of the overseas alumni populations. We find that the LinkedIn data provide plausible measures of Chinese university alumni networks. Alumni populations are in general larger from highly ranked universities, in greater numbers from universities in Beijing and Shanghai and universities with higher numbers of foreign students. These findings help better understand human capital flight, where conventional studies use migration data that do not typically have breakdowns to sub-national units or specify where emigrants received their education.

Target2: The Silent Bailout System That Keeps the Euro Afloat

Target2 is the Eurozone’s cross-border payment system, which is mandatory for the settlement of euro transactions involving Eurozone central banks. It is being used to save the Eurozone from imploding. A key underlying problem is that the Eurozone does not satisfy the economic conditions for being an Optimal Currency Area, i.e., a geographical area over which a single currency and monetary policy can operate on a sustainable, long-term basis. The different business cycles in the Eurozone, combined with poor labour and capital market flexibility, mean that systematic trade surpluses and deficits will build up because inter-regional exchange rates can no longer be changed. Surplus regions need to recycle the surpluses back into deficit regions via transfers to keep the Eurozone economies in balance. But the largest surplus country—Germany—refuses to formally accept that the European Union is a ‘transfer union’. However, deficit countries, including the largest of these—Italy—are using Target2 for this purpose. Target2 has become a giant credit card for Eurozone members that import more than they export to other members, but with two differences compared with normal credit card debt: neither the debt nor the interest that accrues on the debt ever needs to be repaid. Furthermore, the size of the deficits being built up is causing citizens in deficit countries to lose confidence in their banking systems, leading them to transfer their funds to banks in surplus countries. Target2 is also being used to facilitate this capital flight. However, these are not viable long-term solutions to systemic Eurozone trade imbalances and weakening national banking systems. There are only two realistic outcomes. The first is a full fiscal and political union, with Brussels determining the levels of tax and public expenditure in each member state—which has long been the objective of Europe’s political establishment. The second outcome is that the Eurozone breaks up.

Бегство капитала из России и возможные источники финансирования расходов бюджета

The article considers the problems of capital flight from Russia in current conditions and the related problems of financing budget expenditures. The difference between capital export and capital flight, which occurs in conditions of extremely high risks or unfavorable investment climate, is substantiated. The balance of payments of Russia in 2022 is analyzed, and it is substantiated that in the current situation capital flows are largely capital flight from political and economic risks. The author estimates the size of capital flight from Russia in 2022 (approximately $232 billion), and concludes that the mandatory sale of foreign exchange earnings in modern conditions can be replaced by more flexible control measures. Further, the paper analyzes a set of complex problems of financing the federal budget expenditures of Russia in the current conditions. Three possible mechanisms of financing the budget deficit (or additional expenditures) are considered: at the expense of new public debt, at the expense of the National Welfare Fund and sale of state assets, as well as at the expense of new emergency taxes. It is concluded that attraction of new sources for government borrowing is practically impossible without a significant increase in interest expenditures. At the end of the paper, for the recovery of the Russian economy, there is a proposal to introduce a new flexible tax on the export of capital, which can create incentives for investment in the Russian economy and solve the problems of financing federal budget expenditures in modern conditions.

Analisis Keterkaitan Capital Flight dan Cadangan Devisa : Pendekatan Vector Error Correction Model (VECM) di Indonesia

This study examines the relationship and response to shocks between capital flight and foreign exchange reserves in Indonesia for the 2018-2022 period. This study uses VECM (Vector Error Correction Model) model analysis, aimed at seeing the relationship between capital flight and foreign debt variables and trade balance to Indonesia's foreign exchange reserves. The results of the analysis that have been carried out show that the variable of foreign debt does not affect and is irrelevant to Indonesia's foreign exchange reserves in the long and short term. Meanwhile, trade balance variables affect and are relevant to Indonesia's foreign exchange reserves in the long and short term.

Capital flight and the real exchange rate: evidence from resource scarce MENA countries

ABSTRACT We analyze the determinants of capital flight in three resource scarce MENA countries namely Egypt, Morocco, and Tunisia. Our methodology involves both the linear and nonlinear autoregressive distributed lag (ARDL) cointegration approaches, with a focus on asymmetric relationships between capital flight and the real exchange rate, to distinguish the impact of real appreciation and depreciation of domestic currency on capital flight. The results based on nonlinear ARDL approach using annual data between 1977 and 2019 indicate that in Egypt, financial openness is negatively related with capital flight, while real depreciation seems to increase it in the long run. Our findings also reveal that the real GDP growth rate, institutional quality as well as inflation are important factors affecting capital flight in Morocco, whereas financial openness and the real exchange rate influence capital flight significantly in Tunisia.

The AFL-CIO, the U.S. Balance of Payments, and the End of the Post–World War II Liberal Order, 1965–1973

This article analyzes the AFL-CIO’s international economic policy activism in the late 1960s and early 1970s within the context of the collapse of Bretton Woods monetary system. It shows that AFL-CIO economists developed a far-reaching critique of multinational corporations that encompassed not only concerns about import competition and capital flight but also charges that multinational firms contributed to the United States’ balance of payments woes. Fighting charges that union wages drove inflation, labor leaders maintained that private capital outflows and intracompany transactions exacerbated U.S. payments deficits. They therefore advocated for capital controls and import restrictions as alternatives to fiscal and monetary restraint. Their efforts to preserve the expansionary policies underpinning postwar liberalism, however, ultimately failed. By calling attention to the AFL-CIO’s failed activism in international monetary politics, the article offers a new vantage point for understanding organized labor’s declining influence in the last third of the twentieth century.

Promoting Renewable Energy Consumption in Sub-Saharan Africa: How Capital Flight Crowds Out the Favorable Effect of Foreign Aid

The study assesses the effect of capital flight in the nexus between foreign aid and renewable energy consumption in 20 countries in sub-Saharan Africa using data for the period 1996 to 2018. The empirical technique employed is interactive quantile regressions, and the following findings are established. Foreign aid increases renewable energy consumption, while capital flight dampens the favorable effect of foreign aid on renewable energy consumption. The underlying significance and corresponding mitigating effect are exclusively relevant to the bottom (i.e., 10th) quantile of the conditional distribution of renewable energy consumption. The findings are robust to simultaneity and unobserved heterogeneity. Policy implications are discussed. JEL Classification: H10; Q20; Q30; O11; O55

Development and Psychometric Properties of the Brain Drain Questionnaire for Nurses.

Background and Purpose: Brain drain, also known as "human capital flight," refers to the migration of employees such as nurses from developing countries to wealthier countries for better living conditions. There is a dearth of literature internationally about the determinants and factors influencing nurses' brain drain using a standardized instrument. This study aimed to assess the psychometric properties of the brain drain questionnaire (BDQ). Methods: This methodological study was conducted with 325 Egyptian nurses who were recruited to answer the BDQ. The psychometric properties were examined. Results: The final BDQ contained 59 items. The Cronbach's α, content validity index, and intraclass correlation coefficient were 0.979, 0.88, and 0.778, respectively. Confirmatory factor analysis and convergent validity also validated the BDQ. Conclusion: The BDQ has acceptable reliability and validity among nurses and the potential to be clinically useful. Future cross-validation research across sectors and nations is recommended to optimize its utility.

PEMBAJAKAN MEREK DALAM TATANAN HUKUM KEKAYAAN INTELEKTUAL DI INDONESIA: KRAFT FOODS GLOBAL BRANDS LLC., (OREO) MELAWAN PT. SIANTAR TOP Tbk (ORIORIO)

Trademarks are part of intellectual property rights, for this reason, there is a need for legal protection over trademarks. The current phenomenon is that there is a lot of counterfeiting or piracy of brands which of course has violated the law carried out by producers of goods and/or services that do not have good faith. Based on the case, this research aims to find out the legal policies related to brands in the intellectual property legal order in Indonesia and to determine the effects of brand piracy on the Indonesian economy. This research is doctrinal research using normative legal research methods. The approach used is the legislation approach and conceptual approach by prioritizing primary, secondary and tertiary legal materials such as binding regulations, books, and journals of legal research related to brands. This study shows that brand-related policies are regulated in Law Number 20 of 2016 concerning Trademarks and Geographical Indications and their implementing regulations. The rights to the mark are granted by the state through the registration mechanism which must be carried out by the owner. The registration is mandatory so that if rights are not registered the trademark will not be protected. Then the economic impact on brand piracy is the loss of brand owners, consumers, and the state. Brand owners suffer losses because their products cannot compete with pirated brands whose prices are relatively cheaper. Whereas the state does not get income from sales tax. In the case of taxation, it is a significant source of state revenue to finance development. As a result of brand piracy also caused capital flight abroad (capital flight), which affected the number of unemployed.

Effect of Exchange Rate on Domestic Price Level in Nigeria

Nigeria experienced significant depreciation of her currency during the specified period of this study, mainly due to factors such as falling oil prices, external economic conditions such as slowdown in global economic growth, trade tensions which led to capital outflows from emerging markets including markets in Nigeria, tightening of global monetary policy which affected capital flows to these emerging markets, coupled with domestic macroeconomic challenges like concerns over policy consistency, governance issues and security challenges, capital flight and weakened investors’’ confidence. These conditions collectively created an adverse environment for the Nigerian economy, leading to the depreciation of Naira. Consequently, this study set out to achieve the main objective of investigating on a more recent basis, effects of exchange rate on domestic price level in Nigeria. The period covered was from January 2015 through December 2022. The study adopted the Autoregressive Distributed Lag (ARDL) model and the variables included consumer price inflation, nominal exchange rate, import prices, international crude oil prices and real output growth. We found insignificant positive impact of the nominal exchange rate on consumer price inflation in Nigeria. The import prices also proved a significant effect on consumer price inflation in Nigeria. the study recommends that Governments at all levels in the country should encourage and support the innovative ideas of business firms and individuals. This will support local production, hence, there can be substitution of imported goods for domestically produced goods and the exchange rate will be stable.

How Chinese fintech threatens US Dollar hegemony

This article will argue that the development of Chinese financial technology, or ‘fintech’, over the past decade, is primarily motivated to safeguard Chinese monetary sovereignty, which is threatened by the proliferation of non-state cryptocurrencies, like Bitcoin, that have exacerbated the problem of capital flight, not only for China, but for other non-Western countries that have lost fortunes to outflows seeking access Western financial assets. This raises the question, how is China responding to the emergence of cryptocurrencies as a development that reinforces US financial hegemony? The answer to be explored by this paper is by embracing elements of cryptocurrency technology in the form of digital payment systems and blockchain technology. These Chinese fintech developments pose a serious unprecedented challenge to the financial hegemony of the US insofar as it compels other countries to copy the Chinese response because they desire the tools to limit illegal outflows of capital that have historically propped up the US Dollar.

The Effect of Capital Flight on Economic Growth in Rwanda

The Effect of Capital Flight on Economic Growth in Rwanda

Impact of the belt and road initiative on trade status and FDI attraction: A local and global network perspective

The Belt and Road Initiative (BRI) is attracting an increasing number of countries to join it for financial support and development opportunities. However, have the countries had higher trade status and been more attractive to foreign direct investment since joining the BRI? Have they cooperated more intensively with other countries? To answer the questions, based on two mixed network centrality measures, we utilize a difference-in-differences approach to examine the impact of the BRI on trade status and FDI attraction using a sample of 93 countries during 2008–2018 from a local and global network view. In multi-dimension characteristic and dynamic evolution analysis, we capture distinct network changes after the BRI. Our empirical results indicate a positive BRI effect on trade status and FDI attraction of BRI countries. From a local network view, we find the BRI effect on trade status requires a longer period, while the BRI effect on FDI attraction fades over time. We document a whole-period positive BRI effect on trade status and FDI attraction from a global network view. Moreover, the pioneering role and mediating effect of FDI attraction are identified. Last, we also find that the BRI alleviates the trade deficit and domestic capital flight.

Does capital flight tone down economic growth? Evidence from emerging Asia

PurposeThis study aims to offer an up-to-date estimate of capital flight from selected emerging Asian economies and examine the anti-growth phenomenon of capital flight by using annual data for the period 1981–2019.Design/methodology/approachThe study relies on residual methods to derive the estimate of capital flight with necessary adjustments. It then applies the autoregressive distributed lag Bounds testing approach in examining the impact of capital flight on the economic growth of Asian emerging economies.FindingsThe study identifies capital flight as the attributor to the slower economic growth of the selected emerging economies of Asia.Practical implicationsApart from appropriate policies addressing the issues causing capital flight, unleashing the way of private sector-led growth of the emerging countries with necessary policy, infrastructural, institutional and regulatory support can rather help them retain and repatriate domestic capital.Originality/valueThe capital flight estimates in earlier studies are antithetical as they differ in terms of definition and estimation procedure. Again, the growth effect of capital flight in these economies has received meager attention in research and policy debates. Furthermore, being country-specific or region-specific, existing studies are unable to compare the growth effect of capital flight for different emerging economies in this region. Examining the growth effects for a large number of countries separately based on a common estimate of capital flight can resolve these issues that this study aims to do.

An Examination of the Impact of Capital Flight on Economic Growth in Nigeria

The study examined the impact of capital flight on economic growth in Nigeria applying annual data sourced from Central Bank of Nigeria Statistical Bulletin from 1986 to 2020 and using an Error Correction Model (ECM). The results of the cointegration test demonstrated that the variables have a long-term relationship. The findings show that most of the constituents of Capital flight (first, second and third lags of foreign direct investment and portfolio Investment) have negatively impacted Nigeria’s economic growth. In contrast, external debt and current account balances positively impact on economic growth in Nigeria. This, therefore, confirmed that changes in capital flight impact economic growth in Nigeria. The study recommends that the government and stakeholders create an attractive, conducive, and enabling environment suitable for ease of doing business that will attract and retain foreign investors in the country. More importantly, the Government should ensure proper use of the funds borrowed, by channelling it to the productive sector of the economy and will also increase Government revenues.

The Impact of Capital Flight on Economic Growth in Bangladesh

The Impact of Capital Flight on Economic Growth in Bangladesh

Regime dependent dynamics of parallel and official exchange markets in China: evidence from cryptocurrency

ABSTRACT This paper studies the dynamic relationship between the parallel and official exchange rates of Chinese Yuan (CNY) to U.S. Dollar (USD). Motivated by recent evidence about Bitcoin as a major channel for capital flight from China, we construct a parallel exchange rate implied by Bitcoin prices in the Chinese and U.S. crypto exchanges. While the dual exchange rates are cointegrated, adjustment to long-run equilibrium is non-linear and depends on policy changes and state of the markets. Results from our Markov Switching Vector Error Correction model suggest the parallel exchange rate responds one-to-one in the long-run with respect to an official exchange rate innovation. However, an unexpected change in the parallel rate is countered by an opposite and state-dependent response in the official exchange rate, suggesting active exchange policy interventions by the Chinese monetary authority.

The mystery of misreported trade: A novel method to identify distorted trade figures

AbstractThis research shows that misreporting of trade is rampant, which markedly reduces the quality of reported bilateral trade data. We devise a novel methodology to correct for misreported bilateral trade while accounting for the composition of product types and for trading partners. Based on bilateral data for 196 countries in the world at the product level over the period 1996–2017, we find that (i) our corrected trade data are significantly more reliable than reported data; (ii) our corrected data are significantly more reliable than data based on conventional misreporting correction methods; (iii) corrected trade balances are often quite distinct from their reported counterparts; (iv) capital flight is the most important source of misreporting and (v) the misreporting propensity tends to cluster geographically, with the main offenders often deviating from common perceptions in the literature. Based on estimates of the gravity model, we show that geographical characteristics are more influential than institutional variables in explaining misreporting.

Monetary policy and Bitcoin

I empirically study the impact of monetary policy on Bitcoin, and show that is has evolved over time. First, based on high-frequency data, the paper documents that Bitcoin prices did not immediately respond to US monetary policy announcements in the past; they only started doing so in late 2020, in a manner similar to other risky asset prices. Second, based on a structural VAR analysis I study the impact of monetary policy over longer horizons. I confirm the contractionary impact of a US monetary tightening in the post-2020 time period, but show that, historically, a US tightening used to persistently increase rather than decrease Bitcoin prices. To explain this result, I exploit spreads in Bitcoin valuations across currencies and blockchain data and link increased Bitcoin demand to East Asian economies subject to capital controls, particularly China. I discuss implications for the discussion of where demand for Bitcoin stems from: its recent responses to monetary policy confirm its role as a primarily speculative asset; yet, at least historically Bitcoin seems to have derived part if its value from enabling cross-border value transfers and capital flight.

Reducing Capital Flight in Africa: Does Regional Financial Integration Matter?

Capital flight continues to be an issue of paramount importance for developing economies, as it deprives them of the funds required for economic takeoff. Hence, this paper aims to analyze the effect of regional financial integration (RFI) on capital flight in Africa. Based on a sample of 23 countries, we specify and estimate an asset demand model of capital flight using a portfolio choice analysis by the system-generalized method of moments for the period 1996-2015. We find two important results. First, the RFI reduces capital flight. This result becomes even more interesting when the quality of governance is considered. Second, structural breaks in the RFI-capital flight relationship explain why the RFI has had a mixed effect on the capital flight over the study period. We recommend that the attractiveness of regional financial services be enhanced concurrently with the standardization of banking and financial regulation in Africa.