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Rivers State University, Port Harcourt.
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| Title: | Capital Flight and Economic Growth in Selected West African Countries: Static Panel Model Approach |
| Author(s): | Worga C. E. Amadi S. N. & Ewubare D. B. |
| Abstract: | This study examined the effect of capital flight on economic growth in selected West African countries with focus on, Ghana, Liberia, Nigeria, Sierra Leone and the Gambia from 1990 to 2022. The datasets were obtained from World Development Indicator {WDI) and IMF financial statistics data base and analysed using descriptive statistics, panel unit root test, random effects model and Hausman test among others. The panel unit root test results showed that all the variables were stationary. The estimated random effects showed that FDI outflows had a positive and significant effect on GDP. Evidence of a negative and significant effect of multilateral debt service on GDP was established from the random effects model. In addition, the results showed that personal income payments to non residents and financial account outflows had negative and significant effects on GDP during the study period. Specifically, the estimated parameter showed that GDP declined by 0.0214% following a percentage increase in personal income payments to non-residents. Similarly, a percentage increase in financial account outflows was associated with 2.025% decrease in GDP. This finding explains that personal income payments to non-residents as an important aspect of capital flight poses a threat to the growth of the selected West African economies. The results equally showed that the selected countries tend to experience more financial outflows than inflows following the adverse implications of financial account outflows on economic growth during the study period. Given the findings, this study recommended among others, that policymakers in the selected West African countries should mitigate FDI outflows by implementing consistent economic policies that promote favourable ease of doing business, investors‘ protection and stability in government, as this would aid in attracting and restoring investors and thus, create more opportunities for economic growth in the region. |
| Keywords: | Capital flight, economic growth, GDP, FDI outflows, multilateral debt and financial account outflows |
| Journal: | Journal of Economic Research and Development Studies Vol 1 No 1 |
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