IDEAS home Printed from https://ideas.repec.org/a/eme/jfrcpp/jfrc-07-2024-0132.html
   My bibliography  Save this article

Unravelling the natural resources and capital flight nexus: evidence from BRICS nations

Author

Listed:
  • Shivangi Pathak
  • Ashis Kumar Pradhan
  • Ronny Thomas

Abstract

Purpose - The purpose of this study is to focus on the impact of environmental factors on capital flight from BRICS countries. This study proposes modelling the different natural resource rents including coal, oil, gas, mineral and forests with capital flight outlining how the resource extraction cause corruption and rent seeking leading to outflow of resident capital. Design/methodology/approach - World Bank residual method is used for estimation of capital flight followed by dynamic common correlated effect (DCCE) approach developed by Chudik and Pesaran (2015) for empirical analysis. To ensure the reliability and robustness of results, this study constructs a Natural Resource Rent Index (NRRI) using principal component analysis (PCA) of various resource rents including coal, oil, gas, mineral and forests. Findings - The econometric analysis reveals that natural resource rents significantly contribute to resident capital outflows from BRICS countries. Furthermore, this study finds that increased government involvement in resource extraction significantly reduces capital flight. Practical implications - The findings of this study emphasize the necessity of proactive policy measures to mitigate capital flight from BRICS countries, particularly through enhanced government engagement in resource management. Originality/value - This study fills literature gap by identifying how environmental factors fuel capital flight in BRICS economies.

Suggested Citation

  • Shivangi Pathak & Ashis Kumar Pradhan & Ronny Thomas, 2024. "Unravelling the natural resources and capital flight nexus: evidence from BRICS nations," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 33(2), pages 129-151, December.
  • Handle: RePEc:eme:jfrcpp:jfrc-07-2024-0132
    DOI: 10.1108/JFRC-07-2024-0132
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFRC-07-2024-0132/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFRC-07-2024-0132/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/JFRC-07-2024-0132?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Capital flight; Natural resource rent; BRICS; Government effectiveness; F13; F32; O13; Q58;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jfrcpp:jfrc-07-2024-0132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.