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Capital Flight and Tax Havens: Impact on Investment and Growth in Africa

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  • Léonce Ndikumana

Abstract

This paper examines the implications of capital flight and tax havens for economic development in African economies. Specifically, it investigates the impact of capital flight on domestic investment and the opportunity costs of capital flight in terms of foregone growth. First, econometric analysis is used to assess the impact of capital flight on domestic investment. Second, a simulation exercise is undertaken to estimate the potential gains in terms of growth that could be derived from investing capital flight domestically. The empirical evidence is used to draw some policy implications.

Suggested Citation

  • Léonce Ndikumana, 2014. "Capital Flight and Tax Havens: Impact on Investment and Growth in Africa," Revue d’économie du développement, De Boeck Université, vol. 22(HS02), pages 99-124.
    • Handle: RePEc:cai:edddbu:edd_hs02_0099
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    Cited by:

    1. repec:rac:ecchap:2017-17 is not listed on IDEAS
    2. Giovanni Andrea Cornia, 2020. "Is Rising Inequality Unavoidable in a Globalizing Economy Characterized by Rapid Technical Change?," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 39-65, March.
    3. repec:rac:ecchap:2017-18 is not listed on IDEAS
    4. Sharafutdinova,Gulnaz & Lokshin,Michael M., 2020. "Hide and Protect : A Role of Global Financial Secrecy in Shaping Domestic Institutions," Policy Research Working Paper Series 9348, The World Bank.
    5. Cornia, Giovanni Andrea & Odusola, Ayodele & Bhorat, Haroon & Conceição, Pedro, 2017. "Planting and nurturing the seeds of equity in Africa," UNDP Africa Research Discussion Papers 266951, United Nations Development Programme (UNDP).
    6. Cornia, Giovanni Andrea & Odusola, Ayodele & Bhorat, Haroon & Conceição, Pedro, 2017. "Income Inequality Trends in sub-Saharan Africa Divergence, Determinants and Consequences: Introduction, Motivation and Overview," UNDP Africa Reports 267639, United Nations Development Programme (UNDP).
    7. UNDP Regional Bureau for Africa & Ayodele Odusola & Giovanni Andrea Cornia & Haroon Bhorat & Pedro Conceição & Ayodele Odusola & Giovanni Andrea Cornia & Haroon Bhorat & Pedro Concei ‹o, "undated". "Introduction, Motivation and Overview," UNDP Africa Policy Notes 2017-02, United Nations Development Programme, Regional Bureau for Africa.
    8. UNDP Regional Bureau for Africa & Giovanni Andrea Cornia, "undated". "Inequality Levels, Trends and Determinants in sub-Saharan Africa: An overview of main changes since the early 1990s," UNDP Africa Policy Notes 2017-03, United Nations Development Programme, Regional Bureau for Africa.
    9. Giovanna Andrea Cornia & Antonio Scognamillo, 2016. "Clusters of Least Developed Countries, their evolution between 1993 and 2013, and policies to expand their productive capacity," CDP Background Papers 033, United Nations, Department of Economics and Social Affairs.
    10. Cornia, Giovanni Andrea, 2017. "Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: An Econometric Investigation of the Causes of the Bifurcation of within-Country Inequality Trends over 1991-2," UNDP Africa Reports 267777, United Nations Development Programme (UNDP).
    11. André Moulemvo, 2016. "Impact of Capital Flight on Public Social Expenditure in Congo†Brazzaville," African Development Review, African Development Bank, vol. 28(S1), pages 113-123, April.
    12. Lionel Effiom & Emmanuel Uche & Otei Asuquo Otei, 2021. "Asymmetric effects of capital flight on domestic investment in Nigeria: evidence from non-linear autoregressive distributed lag model," SN Business & Economics, Springer, vol. 1(10), pages 1-23, October.
    13. UNDP Regional Bureau for Africa & Ayodele Odusola & Giovanni Andrea Cornia & Haroon Bhorat & Pedro Conceição & Ayodele Odusola & Giovanni Andrea Cornia & Haroon Bhorat & Pedro Concei ‹o, "undated". "Conclusions and Policy Recommendations," UNDP Africa Policy Notes 2017-18, United Nations Development Programme, Regional Bureau for Africa.
    14. UNDP Regional Bureau for Africa, "undated". "An Econometric Investigation of the Causes of the Bifurcation of Within-Country Inequality Trends over 1991-2011 in sub-Saharan Africa," UNDP Africa Policy Notes 2017-17, United Nations Development Programme, Regional Bureau for Africa.
    15. repec:rac:ecchap:2017-02 is not listed on IDEAS
    16. Cornia, Giovanni Andrea, 2017. "Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: Inequality Levels, Trends and Determinants in sub-Saharan Africa: An Overview of main changes since the early," UNDP Africa Reports 267642, United Nations Development Programme (UNDP).
    17. repec:rac:ecchap:2017-03 is not listed on IDEAS

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