Fighting Capital Flight in Africa: Evidence from Bundling and Unbundling Governance

Arbeitspapier

This study investigates the effect of governance on capital flight by bundling and unbundling governance. The empirical evidence is based on 37 African countries for the period 1996-2010 and the Generalised Method of Moments. Governance is bundled by principal component analysis, namely: (i) political governance from political stability and ‘voice and accountability’; (ii) economic governance from government effectiveness and regulation quality and (iii) institutional governance from corruption-control and the rule of law. The following findings are established. (i) Political stability and ‘voice and accountability’ reduce capital flight while the collective effect of political governance is not significant. (ii) Economic governance increases capital flight whereas the individual effects of regulation quality and government effectiveness are not significant. (iii) Corruption-control and institutional governance negatively affect capital flight whereas the impact of the rule of law is not significant. (iv) Taken together, Corruption-control is the most effective governance weapon in the fight against capital flight. (v) Priority in the Washington Consensus is more effective at fighting capital flight compared to the Beijing Model. Policy implications are discussed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: AGDI Working Paper ; No. WP/16/047

Classification and Topics

• Classification: Wirtschaft ; Econometric Modeling: General ; Fiscal Policy ; International Lending and Debt Problems ; Economywide Country Studies: Africa ; Socialist Systems and Transitional Economies: Legal Institutions; Illegal Behavior
• Subject: Econometric modelling ; Capital flight ; Governance ; Africa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Asongu, Simplice ; Nwachukwu, Jacinta
• Event: Veröffentlichung
• (who): African Governance and Development Institute (AGDI)
• (where): Yaoundé
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/149971
• Last update: 10.03.2025, 11:46 AM CET