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Robbing the Riches: Capital Flight, Institutions, and Instability

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  • Ms. Sweta Chaman Saxena
  • Meenakshi Rishi
  • Ms. Valerie Cerra

Abstract

Capital flight may undermine economic growth and the effectiveness of debt relief and foreign aid. This paper is the first attempt to test whether unsound macroeconomic policies or weak institutions lead to capital flight, using panel data for a large set of developing, emerging market and transition countries. In addition, the paper tests the revolving door hypothesis that links debt accumulation and capital flight, and analyzes the contribution of institutions to several channels in this relationship.

Suggested Citation

  • Ms. Sweta Chaman Saxena & Meenakshi Rishi & Ms. Valerie Cerra, 2005. "Robbing the Riches: Capital Flight, Institutions, and Instability," IMF Working Papers 2005/199, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/199
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    References listed on IDEAS

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    2. Isaac Kwesi Ampah & Gabor David Kiss, 2019. "Economic Policy Implications of External Debt and Capital Flight in Sub-Saharan Africa’s Heavily Indebted Poor Countries," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(4), pages 523-542, December.
    3. Raghbendra Jha & T. Palanivel, 2007. "Resource Augmentation for Meeting the Millennium Development Goals in the Asia Pacific Region," ASARC Working Papers 2007-02, The Australian National University, Australia South Asia Research Centre.
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    5. Abroskin A.S. (Аброскин, А.С.) & Abroskina N.A. (Аброскина, Н.А.), 2016. "Shadow Cross-Border Capital Flows: Contemporary Concepts, Principles and Information Base of Accounting and Measurement [Теневые Трансграничные Потоки Капитала: Современные Концепции, Принципы И Ин," Working Papers 2135, Russian Presidential Academy of National Economy and Public Administration.
    6. Heydari, Hassan & Jariani, Farzaneh, 2020. "Analyzing Effective Factors of Capital Outflow from the Middle East and North African Countries (MENA)," MPRA Paper 104547, University Library of Munich, Germany.
    7. Vincent A. Onodugo & Ijeoma E. Kalu & Oluchukwu F. Anowor & Nnaemeka O. Ukweni, 2014. "Is Capital Flight Healthy For Nigerian Economic Growth? An Econometric Investigation," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(1), pages 10-24.
    8. Jozef Pacolet & Joris Vanormelingen, 2015. "Illicit Financial Flows: concepts and first macro estimates for Belgium and its 18 preferred partner countries," BeFinD Working Papers 0110, University of Namur, Department of Economics.
    9. Nirmol Chandra Das & Mohammad Ashraful Ferdous Chowdhury & Md. Nazrul Islam, 2021. "Nonlinear Threshold Effects of Institutional Quality on Capital Flight: Insights From Bangladesh," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 12(1), pages 43-59, January.

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