IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/35836.html
   My bibliography  Save this paper

Capital Flight and Investment Dynamics in Nigeria: A Time Series Analysis (1970-2006)

Author

Listed:
  • Adesoye, A. Bolaji
  • Maku, Olukayode E.
  • Atanda, Akinwande A.

Abstract

This study critically examines the implications of capital flight on investment growth in Nigeria between 1970 and 2006, because of the consequential effect it has on economic growth. The time series data properties incorporated were examined using the Augmented Dickey-Fuller (ADF) unit root test and the results revealed that Investment, capital flight, interest rate and exchange rate were stationary at levels excluding exchange rate found to be integrated at first difference. The Augmented Engle-Granger (AEG) co-integration test employed to investigate the dynamic relationship between capital flight and investment level in Nigeria, revealed that there exist long-run interaction. Though, capital flight was found to exert positive but insignificant effect on investment growth during the review period. While, the short-run dynamic interaction as a result of the structural instability in the long-run was captured by the Error Correction Mechanism (ECM) model which was found inestimable due to the high collinearity existing among the incorporated variables. Policy recommendations were proffered base on the research findings.

Suggested Citation

  • Adesoye, A. Bolaji & Maku, Olukayode E. & Atanda, Akinwande A., 2012. "Capital Flight and Investment Dynamics in Nigeria: A Time Series Analysis (1970-2006)," MPRA Paper 35836, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35836
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/35836/1/MPRA_paper_35836.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pastor, Manuel Jr., 1990. "Capital flight from Latin America," World Development, Elsevier, vol. 18(1), pages 1-18, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lionel Effiom & Alfa Charles Achu & Samuel Etim Edet, 2020. "Capital Flight and Domestic Investment in Nigeria: Evidence From ARDL Methodology," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 348-360, January.
    2. Johnny Nelson & Okoyan Krokeme & Dumani Markjarkson & Ekokeme Tamaroukro Timipere, 2018. "Impact of Capital Flight on Exchange rate in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(1), pages 41-50, January.
    3. Dachraoui, Hajer & Smida, Mounir, 2014. "La Mesure de la Fuite des Capitaux et son Impact sur l’Investissement Domestique : Cas des Pays Émergents [Measurement of capital flight and its impact on domestic investment in emerging countries]," MPRA Paper 62740, University Library of Munich, Germany.
    4. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jean-Louis Combes & Alexandru Minea & Pegdéwendé Nestor Sawadogo, 2019. "Assessing the effects of combating illicit financial flows on domestic tax revenue mobilization in developing countries," CERDI Working papers halshs-02019073, HAL.
    2. Sadik, Ali T. & Bolbol, Ali A., 2003. "Arab External Investments: Relation to National Wealth, Estimation, and Consequences," World Development, Elsevier, vol. 31(11), pages 1771-1792, November.
    3. Pastor Jr., Manuel & Wise, Carol, 1999. "Stabilization and its Discontents: Argentina's Economic Restructuring in the 1990s," World Development, Elsevier, vol. 27(3), pages 477-503, March.
    4. Neeman Zvika & Paserman M. Daniele & Simhon Avi, 2008. "Corruption and Openness," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-40, December.
    5. Ila Patnaik & Abhijit Sen Gupta & Ajay Shah, 2012. "Determinants of Trade Misinvoicing," Open Economies Review, Springer, vol. 23(5), pages 891-910, November.
    6. Fofack, Hippolyte, 2009. "Causality between external debt and capital flight in Sub-Saharan Africa," Policy Research Working Paper Series 5042, The World Bank.
    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. Hajer Dachraoui & Mounir Smida & Maamar Sebri, 2020. "Role of capital flight as a driver of sovereign bond spreads in Latin American countries," International Economics, CEPII research center, issue 162, pages 15-33.
    9. us Swaleheen, Mushfiq, 2008. "Corruption and saving in a panel of countries," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1285-1301, September.
    10. Morris, Sebastian, 2007. "Role of Trade and Macroeconomic Policies in the Performance of Special Economic Zones (SEZs)," IIMA Working Papers WP2007-09-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    11. Ljungwall, Christer & Wang, Zijian, 2008. "Why is capital flowing out of China?," China Economic Review, Elsevier, vol. 19(3), pages 359-372, September.
    12. Alejandro Diaz-Bautista & Cesar Alfredo Olivas Andrade, 2005. "Un Análisis de cointegración con corrección de errores de las Fugas de Capital y la Inestabilidad Política en México , An econometric model of capital flight in Mexico," International Finance 0511004, University Library of Munich, Germany.
    13. Ndikumana, Leonce & Boyce, James K., 2003. "Public Debts and Private Assets: Explaining Capital Flight from Sub-Saharan African Countries," World Development, Elsevier, vol. 31(1), pages 107-130, January.
    14. Cheung, Yin-Wong & Steinkamp, Sven & Westermann, Frank, 2016. "China's capital flight: Pre- and post-crisis experiences," Journal of International Money and Finance, Elsevier, vol. 66(C), pages 88-112.
    15. Dianah Ngui Muchai & Joseph Muchai, 2016. "Fiscal Policy and Capital Flight in Kenya," African Development Review, African Development Bank, vol. 28(S1), pages 8-21, April.
    16. Sebri, Maamar & Dachraoui, Hajer, 2020. "Resources bless BRICS," MPRA Paper 100423, University Library of Munich, Germany.
    17. Leonce Ndikumana & Mare Sarr, 2019. "Capital Flight, Foreign Direct Investment and Natural Resources in Africa," UMASS Amherst Economics Working Papers 2019-12, University of Massachusetts Amherst, Department of Economics.
    18. Ndikumana, Léonce & Sarr, Mare, 2019. "Capital flight, foreign direct investment and natural resources in Africa," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    19. James K. Boyce & Léonce Ndikumana, 2000. "Is Africa a Net Creditor? New Estimates of Capital Flight from Severely Indebted Sub-Saharan African Countries, 1970-1996," UMASS Amherst Economics Working Papers 2000-01, University of Massachusetts Amherst, Department of Economics.
    20. Calderón, César & Kubota, Megumi, 2013. "Sudden stops: Are global and local investors alike?," Journal of International Economics, Elsevier, vol. 89(1), pages 122-142.

    More about this item

    Keywords

    Capital flight; Investment behaviour; Long-run; Stationarity; ECM; Cointegration; Nigeria;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • A10 - General Economics and Teaching - - General Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:35836. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.