Capital Flight Research Articles

Reflections on the Dangers and Delusions of Education Tourism for Educational Development in Nigeria.

In contemporary times, education tourism has become such a complex phenomenon vis-à-vis the overall development of education in Nigeria. This paper, after explaining the concept of education tourism, takes into consideration the initial historical imperatives that occasioned the need for Nigerians to travel overseas for Higher Education. It identifies the challenges that prompted a rise in education tourism, noting that the Nigerian education sector in particular, and the Nigerian nation in general, suffers huge capital flights as a result of this phenomenon. A further critical analysis from the paper shows that the recent incidents and experiences with education tourism live some Nigerian students with many dangers and delusions-the delusions arising from the incongruence between the knowledge acquired abroad and the dysfunctional social systems in Nigeria. Consequently, the paper submits that Nigerians will be speared much of the complex problems identified with education tourism if the country can adopt some immediate and remote measures that will revitalize its education and make it attractive to the rest of the globe.

Does resource dependence cushion the impact of thin capitalization rules on foreign investment inflows? Evidence from Africa

Due both to the prevarication of political elites and to tax evasion and capital flight by multinationals, Africa's development has not benefited as much from the continent's mineral resources as it should have. The thin capitalization rules (TCRs) implemented by several mineral resources rich-countries to alleviate this concern seem contradictory to the attractiveness policies in force, which results in multiple tax cuts, especially when the shocks observed on mineral prices lead to budgetary pressures. This study investigates how changes in mineral prices and rents affect the impact of TCRs on foreign direct investment (FDI) inflows into Africa. The analyzes are carried out through the two-step systems GMM, using data from 33 cross-countries between 2005 and 2018. Consistently with the assembled literature, the study finds that TCRs harm FDI inflows. This study provides an additional contribution by showing a breaking point from which the rise in the price and the rent of minerals becomes a shield that fully absorbs the negative impact of the TCRs on multinationals' decision to settle. The price and the resulting breaking income are such that the negative impact of the TCRs on FDI inflows is overcompensated when, on average for the sample, the mineral price index goes beyond 103.54 or whenever the mineral rent exceeds 28.32% of the host country's GDP. These results are robust when controlling for the efficiency of government in revenue mobilization. The study shows that resource-rich countries in Africa should consider promoting the non-extractive sector's attractiveness in anticipation of the depletion of mineral reserves.

Latin American Network for Scientific Culture (RedLCC): A Regional Science Communication Initiative.

Scientific communication has been growing strong worldwide in the past decades. The use of modern data analysis tools to fine-tune its content, strategy, and effectiveness, together with the significative rise of social media, have contributed to such significative growth (Kappel and Holmen, 2019). Social media (such as blogs and microblogging) are powerful engines greatly incorporated into our daily lives for capturing information and as a social tool. As such, they are already being exploited for learning, discovering, searching, storing, and sharing knowledge (Lopez-Goni and Sanchez-Angulo, 2018). Research has shown that online media use increases scientific knowledge (Cacciatore et al., 2014; Su et al., 2015) and positive attitudes toward science (Dudo et al., 2011) therefore enhancing the learning and science process skills. Such scientific knowledge is a critical resource that enables political actors to inform and legitimate political decisions, and it is also important for non-scientific audiences in terms of forming public opinion about important political issues (Huber et al., 2019). Moreover, previous work has demonstrated that democratic societies that are scientifically literate make equitable choices regarding science-related policy issues (European Commission, 1995; Rudolph and Horibe, 2016). Thus, according to Marquez and Porras (2020), effective science communication and science literacy are socioeconomically imperative for all societies. At the same time, Science Communication can serve various diplomatic purposes. Particularly, science popularization initiatives, even when not targeted to policymakers or diplomats, can both raise awareness about international scientific cooperation and about locally produced science and technology which could be highly overlooked (Leach, 2015). English is currently the lingua franca of science. Currently, 98% of publications in science are written in English (Ramirez-Castaneda, 2020). This has facilitated the dissemination of knowledge across boundaries, but at the same time, the hegemony of English in science promotes and enforces the imposition of just one cultural point of view over others (Marquez and Porras, 2020). Because of that, generating science communication multilinguistic alternatives promotes diversity and creates culturally relevant content. Science communication in Spanish is especially imperative in Latin America. The intrinsic functional illiteracy, framed in the lack of economic and educational resources, inequality, poverty, political and social instability, are historical challenges that keep this region from unleashing its full potential (UNESCO, 2020). Moreover, and due to these issues, Latin America faces a human capital flight crisis, in which a high percentage of the individuals pursuing higher academic education end up emigrating and learning a second language. This is reflected in a marked lack of availability of educational resources in Spanish addressed to Latin American communities. Nevertheless, there have been efforts to build remote networks of Latin American scientists and science communicators that come together to counteract this effect. Three renown projects, different in nature, can be used as examples. First, the RedPop (Latin American and Caribbean Network for the Popularization of Science and Technology https://www.redpop.org) is a network of centers and programs created in 1990 at the request of UNESCO's program for Science, Technology and Society (Massarani et al., 2015). It encompasses around 80 science communication projects in different media platforms, but also science museums, interactive science centers, natural history museums, environmental parks, zoos, botanical gardens, and aquariums. Second, the bilingual science communication portal Latin American Science (www.latinamericanscience.org) publishes pieces written by scientist and science writers for the public both in Spanish and English-speaking countries. It focuses on regionally produced research, science policy and science-related stories from the region. And third, the Journal of Science Communication JCOM America Latina (https://jcomal.sissa.it/jcomal/index.jsp), an open access journal focused on science communication in Latin America and publishing contributions in Spanish and Portuguese (Weitkamp and Massarani, 2018). Still, more opportunities need to exist in term of communicating science with regional relevance. Blogs and social media platforms, which are especially open and easily accessible resources, have fantastic potential to address this gap since it is allowing information and education to reach every home to an unprecedented extent. One of these regional initiatives, the Latin American Network for Scientific Culture (RedLCC), brings together regional scientists that communicate science for Latin American communities and, in consequence, also nurtures the “Science for Diplomacy” dimension of Science Diplomacy.

DETERMINANTS OF CAPITAL FLIGHT IN POST WAR SIERRA LEONE: AN EMPIRICAL ANALYSIS

The objective of this paper is to investigate the determinants of capital flight in Sierra Leone and the direction of causality between capital flight and key variables, within the context of the autoregressive distributed lag (ARDL) estimation technique and the granger causality framework. The study utilizes quarterly data spanning the period 2000:Q1 to 2019:Q1. The bound test result confirms the existence of cointegration. The long run result reveals that real effective exchange rate, corruption and external debt are the main determinants of capital flight in Sierra Leone. Specifically, the finding indicates that real effective exchange rate, high level of corruption and accumulation of external debt cause an increase in capital flight. Furthermore, the result reveals that lagged capital flight, corruption, external debt and financial deepening are the main drivers of capital flight in the short run. Whilst lagged capital flight, corruption and external debt accumulation increase capital flight, the result reveals that a well-developed financial system reduce capital flight. The finding asserts that any disequilibrium in the model is corrected at the 26% adjustment speed annually. The diagnostic test confirms that the coefficients are stable, given that the CUSUM and CUSUMSQ lie within the critical band. The granger causality test results reveal that, external debt and capital flight exhibits bi-directional causality. However, both inflation and exchange rate demonstrate uni-directional causality, given that these variables granger cause capital flight, with no feedback effect. The study therefore urges the Government to take measures to strengthen the Anti-corruption Commission and the judiciary with a view to intensify the fight against corruption, and reduce capital flight. Also, government should put in place modalities to ensure strict capital controls, deepen the financial market and maintain broad macroeconomic stability as recipe to reduce capital flight.

Old Cycles and New Vulnerabilities: Financial Deregulation and the Argentine Crisis

ABSTRACTAfter returning to financial markets in 2016, Argentina asked for IMF financing in 2018 and defaulted on its peso‐denominated short‐term debt in 2019. This article describes this latest short‐lived cycle of external indebtedness and default. The Macri administration that came into power in December 2015 embarked on a path of financial liberalization, external indebtedness, rising public utility tariffs and increased profitability in the agricultural sector, with the aim of lowering inflation, attracting foreign direct investment and promoting economic growth. Vulnerabilities arose because of the combination of financial deregulation, external indebtedness in foreign currency, inflows of volatile short‐term financial capital, capital flight by domestic residents, and the government's flawed reaction to a currency crisis in 2018. The IMF programme failed to attack the causes of the crisis, while plunging the country into a severe recession and a debt default. Notwithstanding the successful renegotiation of external debt with private creditors in 2020, the new Argentinian administration still faces serious challenges if it is to lift the economy out of stagnation.

Business People in War Times, the ‘Fluid Capital’ and the ‘Shy Diaspora’: The Case of Syrians in Turkey

Abstract Due to intensive conflict, a significant amount of Syrian capital flight has funnelled to Turkey since 2011. Drawing upon fieldwork conducted in five major Turkish cities which have hosted the highest number of Syrian business people, this paper first reveals the convergence of the interests of the host state and of the displaced capital owners, as well as the increasing transnationalization of Syrian economic practices. It then assesses the capacity and/or willingness of the Syrian business people to organize themselves as an interest group regarding their interests in Turkey and to assist the process of conflict resolution in Syria. Finally, the paper reflects upon whether a hybrid identity is in the making within the Syrian business diaspora in Turkey. Our findings suggest that the Syrian business diaspora in Turkey is evolving itself into a transnational business community, and developing hybrid socio-economic practices. Yet, we delineate this flourishing community as ‘shy’ because the issues concerning both domestic and Syrian politics are carefully being avoided to keep stability and unity within. This consequently hinders the Syrian business community to form itself as an interest group in Turkey focused on conflict resolution and post-conflict reconstruction in Syria.

A bad turn deserves another: linkages between terrorism, capital flight and industrialisation

ABSTRACT This study examines how the association between terrorism and capital flight affects the process of industrialisation in 36 African countries. The empirical evidence is based on Generalised Method of Moments (GMM) and Quantile Regressions (QR). GMM-oriented findings show that capital flight interacts with terrorism to negatively affect industrialisation in ‘domestic terrorism’- and ‘total terrorism’-oriented regressions. With QR approach, the GMM results are confirmed exclusively in the 25th and 50th quantiles, in regressions pertaining to domestic terrorism, unclear terrorism and total terrorism. It follows that the negative effect from the investigated interaction is driven by bottom quantiles of the industrialisation distribution. This confirms existing literature that developed countries are more likely to limit the negative externalities from terrorism compared to their developing counterparts. Hence, the negative consequence of the association between terrorism and capital flight on industrialisation is a decreasing function of industrialisation.

Terrorism and international economic policy

We add to the ongoing discussion regarding the policy consequences of terrorism by analyzing the effect of terrorism on international economic policy for a panel of 170 countries between 1970 and 2016. We find that countries resort to less liberal international economic policies when facing the threat of terrorism. This effect is especially relevant to smaller (less populated) countries. Our main finding is robust to an instrumental-variable approach. We argue that governments pursue less liberal international economic policies in response to terrorism to interrupt the organization and financing of terrorism, limit capital flight, stabilize public finances and signal political resolve.

Migrant inflows, capital outflows, growth and distribution: should we control capital rather than immigration?

Liberalization policies of international movements of capital and labour have represented a crucial feature of the so-called ‘globalization’ era. More recently, however, several restrictions on migratory movements have been adopted to face the alleged negative effects of immigration. On the contrary, free movement of capital has almost always been preserved. This paper aims to verify whether this current framework of international economic policy can be justified in economic terms. We propose an unprecedented direct comparison between the macroeconomic and distributive impacts of ‘extreme’ episodes of net capital outflows and net migrant inflows in OECD countries between 1970 and 2017. Applying a fixed-effects approach and an event-study approach, we show that GDP growth and functional income distribution have null or even positive statistical relationships with immigration, while they have largely negative statistical relationships with capital flights. More specifically, extreme migrant inflows are not related or in some cases are positively related to real GDP growth, real GDP per capita growth and the wage share, while extreme capital outflows are negatively related to real GDP growth and real GDP per capita growth. These results contrast with current policy agendas and seem to suggest that controls should concern capital movements rather than migratory flows of people.

Does Capital Flight Harm Domestic Investment? An Empirical Investigation from a Panel of Emerging and Advanced Europe

Does Capital Flight Harm Domestic Investment? An Empirical Investigation from a Panel of Emerging and Advanced Europe

External debt sustainability in West African countries

PurposeThis paper aims to apply the debt sustainability framework using various ratios to review the current state of sovereign debt of Economic Community of West African States (ECOWAS) member countries.Design/methodology/approachDebt sustainability framework using various ratios (which include the present value approach, Country Policy and Institutional Assessment debt policy assessment ranking and solvency ratio of external debt) for the period 2010 and 2017 were used for the analysis to determine external debt sustainability and solvency of ECOWAS members.FindingsThe findings indicate that most ECOWAS countries are already turning at the unsustainable debt path and may renege in their debt obligations, thus creating a vicious cycle of external borrowing that could lead to capital flight.Originality/valueThis paper offers the empirical evidence to identify which of the ECOWAS countries are already at the threshold of external debt stress, and in the likelihood to renege on their debt obligations.

Kidnapping rate and capital flight: Empirical evidence from developing countries

AbstractThis paper contributes to the literature on capital flight by investigating the relationship between kidnapping rate and capital flight in developing countries. Numerous empirical studies exist on the determinants of capital flight but, surprisingly, none of them have investigated the empirical link between kidnapping and capital flight. To fill this existing void in the literature, this paper utilised a sample of 67 developing countries for the period 2003–2017. Estimates of the GMM technique show that kidnapping rate has a positive and significant impact on capital flight. However, estimations of the marginal differences show that this significant effect remained consistent only in the sample of ‘fragile’ developing countries. The results remained consistent to alternative measures of capital flight.

Capital Flight and Poverty Reduction in Nigeria

The literature from development economics asserted that two major spillover effects of the prevalence of capital flight and low rate of investment in developing economies are the persistent increase in unemployment and absolute poverty. Since an increase in the poverty rate can be viewed in terms of forgone private and public investment in some poverty reducing programmes like education, health intervention and job creation. Thus, this study investigates the interplay between capital flight and poverty reduction in Nigeria using secondary data covering the period between 1981 and 2017. This study employs the Augmented Dickey Fuller (ADF) test; Philip Perron (PP) test; Kwiatkowski, Phillips, Schmidt and Shin’s (KPSS) all forms of unit root tests; Johansen test for co-integration and Dynamic Ordinary Least Square (DOLS) for long run estimates. The study found that an increase in poverty level in the country would be preceded by raising capital flight coupled with increasing dependence ratio and decline in economic growth rate. In this scenario, the effect of a single digit economic growth is dissipated once the circle continues unabated. Consequently, this study recommends that the Federal Government of Nigeria through the relevant financial authorities should enforce regulation against illicit flow of capital and prosecute offenders. The Federal Government must be seen to support the agency efforts against illicit flow in the country.

An international reserves variation threshold to increase loan funding

In this article we propose a methodology for the calculation of an international reserves variation threshold that defines the lending decisions of international creditors to developing countries. If the change in net international reserves of the borrowing variation is above that of the threshold, the creditors are willing to lend more. Otherwise, if that change is below the threshold, there will be capital flight. Such a threshold depends on the stocks of debt and international reserves, as well as on the perception of the default risk of the country to honour its debts. Using that threshold, we perform a counterfactual exercise to calculate the time series of international reserve levels that minimize the total cost of reserves holding, namely, the cost of possible illiquidity of the country plus the opportunity cost of holding international reserves. We illustrate the methodology by applying it to five Latin American countries: Argentina, Brazil, Chile, Mexico and Peru.

Pipe rolling plants as a target of economic security in Russia during the COVID-19 pandemic

Subject. The article is an attempt to evaluate how the COVID-19 pandemic influences the economic development in Russia, illustrating the case of the tube rolling industry. Objectives. I examine and evaluate how adverse crisis implications of the COVID-19 pandemic could possibly be eliminated in the tube rolling industry, ensuring the economic security of Russia. Methods. The study involves methods of empirical and theoretical research, such as systems and empirical analysis, formal characterization, abstraction, observation, generalization, assessment, and partial methods of economic and statistical analysis. Results. I generally describe the economic situation during the COVID-19 pandemic, evaluate the impact of ties between the oil and tube rolling industries on the economic sovereignty and security of Russia, role of the tube rolling industry in the economic security of the State. I analyzed the impact of the COVID-19 pandemic on the goods circulation in the tube rolling industry and found probable implications of economic destruction for Russia due to the COVID-19 pandemic, and proposed possible solutions for the tube rolling industry. Conclusions and Relevance. The economic security of the tube rolling industry during the current pandemic is exposed to the destruction of foreign trade between countries exporting tube rolling products, price drop and a reduction in the consumption of energy resources worldwide, capital flight, a decrease in labor resources, slowing business activity and restricted transportation tube rolling products, growing uncertainty on the consumption of tube rolling products. The menacing threats can be eliminated given the State intervenes and regulates the Russian tube rolling industry so as to create favorable conditions for the beneficial economic operations.

Farmers’ perception of the state of infrastructure on agricultural production in Delta state, Nigeria

ABSTRACT This article identifies farmers' perceptions of infrastructure availability and condition in rural communities in Nigeria. Multistage sampling procedures were used to survey a sample of 412 respondents. Data analysis used descriptive statistics and a binary logit regression model to analyse the effects of infrastructure on agricultural production. Results revealed, apart from roads, water, community centres/town halls and market structures, infrastructure was perceived to be in bad condition and effects farming activities. Regression results indicated nine variables positively influenced, and four variables negatively influenced, the development of rural infrastructure. Proximity to urban areas, corruption, capital flight, community commitment, finance, access of the rural people to government and the presence of social workers were statistically significant. Conclusions argue for improved provision of infrastructure facilities is needed to support agricultural production in Nigeria.

Osetljivo finansijsko pitanje - odliv kapitala iz Indonezije

Indonesia is a developing country with a high demand for capital from both domestic and international sources. However, international capital flows are needed the most. For non-Western countries, especially Indonesia, capital flight is an unfavourable financial problem. This research aims to summarise capital flight from Indonesia and analyse the impact of macroeconomic and non-macroeconomic determinants through capital flight. Macroeconomic determinants include budget deficits, economic growth, inflation rates, and exchange rates. Nonmacroeconomic determinants are the degree of trade openness, interest rate differences, and dummy ratings. The data comes from the Bank of Indonesia, OECD, Moody's, and BPS-Statistics Indonesia. The coverage of this research is the Indonesian quarter from 2010 to 2018. This period complies with the latest procedures of the sixth edition of the Balance of Payments Manual (BPM 6). In this research, the measurement of the capital flight is the World Bank's residual method, trade misinvoicing method, and combined method. This research finds that, compared with other economics, non-macroeconomics is the most influential determinant of capital flight from Indonesia.

A bad turn deserves another: linkages between terrorism, capital flight and industrialisation

This study examines how the association between terrorism and capital flight affects the process of industrialisationin 36 African countries. The empirical evidence is based on Generalised Method of Moments (GMM) and Quantile Regressions (QR). GMM-oriented findings show that capital flight interacts with terrorism to negatively affect industrialisation in ‘domestic terrorism’- and ‘total terrorism’-oriented regressions. With QR approach, the GMM results are confirmed exclusively in the 25th and 50th quantiles, in regressions pertaining to domestic terrorism, unclear terrorism and total terrorism. It follows that the negative effect from the investigated interaction is driven by bottom quantiles of the industrialisation distribution. This confirms existing literature that developed countries are more likely to limit the negative externalities from terrorism compared to their developing counterparts. Hence, the negative consequence of the association between terrorism and capital flight on industrialisation is a decreasing function of industrialisation.

1923: Hyperinflation in Germany

In the 1920s, Germany experienced one of the most severe episodes of hyperinflation in history. The episode originated in military defeat and revolution, produced instability that figured prominently in the onset of the Great Depression, and created policy dilemmas that present cautionary lessons for leaders in business and government. This note examines the causes, dynamics, and consequences of Germany's hyperinflation in 1923.Hyperinflation is an episode of very large price increases across a broad range of goods and services that often arises from excessive expansion of the supply of paper money to finance government expenditures. It causes wasteful distortions in the functioning of markets, including hoarding of goods and commodities, currency depreciation, capital flight, price controls, and black markets. In a self-reinforcing cycle, price increases beget greater issuance of currency, which begets more price increases and so on, until a political regime shift reforms the unit of currency and government spending. Excerpt UVA-F-1965 Dec. 18, 2020 1923: Hyperinflation in Germany Hyperinflation is an episode of very large price increases—for instance, at the rate of 50% per month—across a broad range of goods and services. It typically arises from excessive expansion of the supply of paper money to finance government expenditures—the new money is issued by central banks that have lost their independence from governments. These episodes amount to wealth redistribution from savers to the government and from creditors to debtors. Hyperinflation causes wasteful distortions in the functioning of markets and in decisions about investment and consumption. Distortions include hoarding of goods and commodities, currency depreciation, capital flight, price controls, and black markets. Ultimately, the distortions accelerate a decline in national output. Hyperinflation is a self-reinforcing cycle. Price increases beget greater issuance of currency, which begets more price increases and so on, until a political regime shift reforms the unit of currency and government spending. This is largely a modern phenomenon; it is a consequence of failed states, wars, and utopian experiments. For instance, from 2007 to 2009, Zimbabwe suffered hyperinflation that reached 500billion percent annually. In 1946, Hungary experienced price increases of 350% per day. In 2018, Venezuela experienced annual inflation of 1.7million percent. . . .

Sovereign Debt, Incapacity and Insecurity in Sub-Saharan Africa

The thesis that sovereign debt and capital flight have some causative effect on the growing insecurity in Africa is one that has not been fully examined. That is the submission of this paper and the need to address it. Fighting insecurity comes at a huge cost and much of the funds diverted to the problem ought to have been available for agriculture bost, health, education and infrastructure needs. The contractual obligation to debt service and the volatility of commodity-dependent economies of the nations in the global market remains a major challenge. Several initiatives to manage the debt are in place by the lending institutions such as IMF, World Bank including an entity like the Paris Club through restructuring, cancellation, etc. Such economic and management strategies have helped to ameliorate but not appreciably solved the problems. This is because they are usually not comprehensive enough debt resumes from the necessity for further borrowings and the profitability of fresh lending by commercial lenders. The legal framework for managing insecurity exists from the global to the regional and national jurisdictions, meaning that the responsibility is collective. However, the fact remains that higher access to funding is required to increase the capacity of the governments to deal with the issues and avoid the vicious cycle of debt, poverty and insecurity in Sub-Saharan African nations.