Economics

| Peer-Reviewed |

Capital Flight and Economic Development: The Experience of Cameroon

Received: 19 September 2016    Accepted: 30 September 2016    Published: 01 November 2016
Views:       Downloads:

Share This Article

Abstract

The paper investigates the relationship between capital flight and economic development in the Cameroon economy during the period1970-2013. Applying the Fully Modified Least Squares (FMOLS) technique, we found evidence in support of a negative significant relationship between capital flight and economic development in Cameroon over the period of the study. Other variables with significant negative impact on economic development are external debt and exports. On the other hand, a factor such as real interest rate was found to associate positively with economic development.

DOI 10.11648/j.eco.20160505.11
Published in Economics (Volume 5, Issue 5, October 2016)
Page(s) 64-72
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

FMOLS, Economic Development, Capital Flight, Cameroon

References
[1] Bouchet,M & Groslambert .B. (2006), An empirical study of the relationships between corruption, capital leakages and country risk. Cuadernos de Diffusion. 11, N0. 20, 9-27.
[2] Ndikumana, L. (2000). Financial determinants of domestic investment in Sub-Saharan Africa: Evidence from panel data. World Development, Vol.28, No.2, pp.381-400.
[3] Collier, P, Hoeffler, A. and Cathy Pattilo (2001). Flight Capital as Portfolio Choice: IMF Working Papers 171 Washington D.C.
[4] Ndikumana, L. and J.K. Boyce (1998), ‘Congo’s Odious Debt: External Borrowing and Capital Flight in Zaıre’, Development and Change, Vol. 29,pp. 1995–217.
[5] UNECA (United Nations Economic Commission for Africa). 2007. Economic report on Africa 2007:Accelerating Africa’s development through diversification. Addis Ababa: UNECA.
[6] Forgha, N., G. (2008). “Capital Flight, Measurability and Economic Growth in Cameroun: An Economic Investigation. International Review of Business Research Papers, 4:pp. 74-90.
[7] Ndikumana, L., and J., K., Boyce (2007) “New Estimates of Capital Flight from Sub-Saharan African Countries: Linkages with External Borrowing and Policy Options”, Paper prepared for the Senior Policy Seminar on “Capital Flight from Sub-Saharan Africa: Implications for Macroeconomic Management and Growth”, October 30-November 2, 2007, Pretoria, South Africa.
[8] Leite, C. and J. Weidmann (1999), “Does mother nature corrupt? Natural resources, corruption, and economic growth”, IMF Working Paper No. 99/85.
[9] Stevens P. (2003), “Resource Impact: Curse of Blessing?,” A Literature Survey, Journal of Energy Literature IX, pp. 3-41.
[10] Wurthmann G. (2006), “Ways of Using the African Oil Boom for Sustainable Development”, African Development Bank, Economic Research Working Paper No 84.
[11] World Bank. (2006). Global development finance 2006.
[12] Artadi, E. V. and Sala-I-Martin, X. (2003). The economic tragedy of the XXth century: Growthin Africa. NBER Working Paper Series, Nr. 9865.
[13] Collier, P. (2006). African growth: why a big push? Journal of African Economies, (15),Supplement 2, 188-211.
[14] Lawanson, A.O. 2007. An Econometric Analysis of Capital Flight from Nigeria: A Portfolio Approach. Research Paper No. 166. African Economic Research Consortium, Nairobi.
[15] Pastor, M. (1990), “Capital Flight from Latin America, World Development” Volume 18.No.1.pp.1-18.
[16] The Global Financial Integrity. (2010) UNECA (United Nations Economic Commission forAfrica), Economic Report on Africa (2007: Accelerating Africa’s Development Through Diversification. Addis Ababa: UNECA.
[17] Baek, S. & Yang, D.. (2008)"Empirics on Capital Flight." Journal of Economic Literature.
[18] Makochekanwa, A. (2007). An Empirical Investigation of Capital Flight from Zimbabwe. A working paper series, Department of Economics, University of Pretoria, South Africa. JEL classification: F39, O11.
[19] Akanni, O., L., L. (2007). An econometric analysis of capital flight from Nigeria: a portfolio approach. AERC research papers, no 166
[20] Mariana,C. ( 2006), The Measurement of Capital Flight and Its Impact on Long Term Economic Growth : Empirical Evidence from a cross section of Countries, Master Thesis, Faculty of Mathematics, Physics and Informatics, Comenius University Bratislava, Bratislava.
[21] Ngeno, N.K.(2000), Capital flight in Kenya. paper presented at AERC workshop, Nairobi, Kenya.
[22] Ajadi, S. F. (2008). Econometric analysis of capital flight in developing countries: a study of Nigeria. 8th Global Conference on Business & Economics. October 18-19th, 2008. Florence, Italy. ISBN: 978-0-9742114-5-9 Al-Fayoumi, N., Alzoubi, M., & Abuzayed, B. (2011). Determinants of capital flight: Evidence from MENA countries. Paper presented at the Barcelona European Academic Conference. Retrieved from http://www.conferences.cluteonline.com/index.php/IAC/2011SP/paper/viewFile/438/444
[23] Gusarova, V. (2009),The impact of Capital flight on economic growth. Unpublished Master’s Thesis of the KYIV School of `Economics.
[24] Ajayi Ibi, S. (1992). “An Econometric analysis of Capital flight from Nigeria”. World Bank Working Paper 1992, WPS0993.
[25] Nyong M.O (2003), capital flight and economic growth in four African countries, Nigeria, Cote D’Ivoire, Morroco and Ghana, DMO monthly seminar series no2, February.
[26] Walter I. (1987), “The Mechanisms of Capital Flight,” in D. R. Lessard and J. Williamson (eds) Capital Flight and Third World Debt, Washington DC: Institute for International Economics.
[27] Cuddington (1986). ‘Capital Flight Estimates, Issues and Explanations’, Princeton Studies in International Finance, No. 58.
[28] World Bank.(1985). Capital Flight and the Third World Debt. Institute of International Economics, Washington D.C.
[29] Erbe, S. (1985).“The Flight of Capital from Developing Countries “. Inter-economics, 20(4):268-75.
[30] Duwendag, D. (1987), Capital Flight from Developing Countries. Estimates Analytical Notes, Journal of Development Economics, 6-15.
[31] Ajayi, I. S., (1997). “An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa,” IMF, Working Paper WP/97/68.
[32] Meier and Baldwin,(1957).Economic Development, John Wilely and Sons, Inc.
[33] Morgan Guaranty Trust Company. (1986). LDC Capital Flight. World Financial Markets, pp 13-15.
[34] Collier, P. and Gunning, J. W. (1999). Explaining African economic performance. Journal of Economic Literature, 37 (1): 64 -111.
[35] Lensink, R., N. Hermes, and V. Murinde (1998): The Effect of Financial Liberalization on Capital Flight in African Economies, World Development, 26(7), 1349-1368.
[36] Ndikumana, L. and Boyce, J. K. (2003). Public debts and private assets: explaining capital flight from Sub-Saharan African countries. World Development, 31 (1) 107-130.
[37] Ndiaye, A. S. (2009).Examining the Effect of Capital Flight on Domestic Investment in the Franc Zone, Paper presented at the “African Econometric Society (AES)”, 14th Annual Conference on Econometric Modeling for Africa, Sheraton hotel, Abuja, Nigeria.
[38] Beja E Jr. (2007). Capital flight and economic performance. Munich Personal Repec Archive Paper No 4885. pp ;1-25. Available:http://mpra.ub.unimuenchen.de/4885/
[39] Kolapo, F,T, Oke MO. (2010) Nigerian economic growth and capital flight determinants. AsianJournal of Business and Management Science. 1(11):76-84.
[40] De Boyrie, M. (2011). Money Laundering and Income Tax Evasion: The Determination of Optimal Audits and Inspections to Detect Abnormal Prices in International Trade, capital Journal of Financial Crime, 12, 123–130. http://dx.doi.org/10.1108/13590790510624972.
[41] Ali, & Walters B. (2011). On the Causes of Capital Flight from Sub-Saharan Africa. University of Manchester; F20, E6, G11, 055
[42] Boyce, J., K., and L. Ndikumana,. (2001). Is Africa a Net Creditor? New Estimates of Capital Flight from Severely Indebted Sub-Saharan African Countries, 1970-1996, Journal of Development Studies,38 (2), 27–56.
[43] International Monetary Fund. (2007a). Balance of payment statistics. CD-ROM edition.
[44] Ndikumana, L. and J.K. Boyce. 2008. “New estimates of capital flight from sub-Saharan African countries: Linkages with external borrowing and policy options”. Political Economy Research Institute (PERI) Working Paper No. 166, Massachusetts, April.
[45] Ndikumana, L., and J., K., Boyce. (2010). Measurement of Capital Flight: Methodology and Results for Sub-Saharan African Countries. African Development Review, Vol. 22, No. 4, 2010, 471–481.
[46] Phillips, Peter C B & Hansen, Bruce E,( 1990). "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Wiley Blackwell, vol.57(1), pages 99-125, January.
[47] Agrawal, P.(2000). Economic Impact of Foreign Direct Investment in South Asia. Indera Gandhi Institute of Development Research, Bombay, India.
[48] Ghura, D. and Godwin B. (2000), Determinants of Private Investment: A Cross Regional Empirical Investigation, Applied Economics, Vol.32, 1819-1829.
[49] Mbanga, G.N. and Sikod, F. (2001); “The Impact of Debt and Debt-Service Payments on Investment in Cameroon”. A final Report presented at AERC Bi-Annual Research Workshop at the Grand Regency Hotel, Nairobi, May, 26-31.
[50] Lawanson (2012) “Inflation Thresholds And Economic Growth: Evidence From Nigeria”, Asian Economic and Financial Review, Vol. 2, No. 7, pp. 876-901.
Author Information
  • Economics, Accounting Division, University of Bamenda, Bamenda, Cameroon

  • Catholic University Instituteof Buea (CUIB), School of Business, Buea, Cameroon

Cite This Article
  • APA Style

    Vukenkeng Andrew Wujung, Mukete Emmanuel Mbella. (2016). Capital Flight and Economic Development: The Experience of Cameroon. Economics, 5(5), 64-72. https://doi.org/10.11648/j.eco.20160505.11

    Copy | Download

    ACS Style

    Vukenkeng Andrew Wujung; Mukete Emmanuel Mbella. Capital Flight and Economic Development: The Experience of Cameroon. Economics. 2016, 5(5), 64-72. doi: 10.11648/j.eco.20160505.11

    Copy | Download

    AMA Style

    Vukenkeng Andrew Wujung, Mukete Emmanuel Mbella. Capital Flight and Economic Development: The Experience of Cameroon. Economics. 2016;5(5):64-72. doi: 10.11648/j.eco.20160505.11

    Copy | Download

  • @article{10.11648/j.eco.20160505.11,
      author = {Vukenkeng Andrew Wujung and Mukete Emmanuel Mbella},
      title = {Capital Flight and Economic Development: The Experience of Cameroon},
      journal = {Economics},
      volume = {5},
      number = {5},
      pages = {64-72},
      doi = {10.11648/j.eco.20160505.11},
      url = {https://doi.org/10.11648/j.eco.20160505.11},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.eco.20160505.11},
      abstract = {The paper investigates the relationship between capital flight and economic development in the Cameroon economy during the period1970-2013. Applying the Fully Modified Least Squares (FMOLS) technique, we found evidence in support of a negative significant relationship between capital flight and economic development in Cameroon over the period of the study. Other variables with significant negative impact on economic development are external debt and exports. On the other hand, a factor such as real interest rate was found to associate positively with economic development.},
     year = {2016}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Capital Flight and Economic Development: The Experience of Cameroon
    AU  - Vukenkeng Andrew Wujung
    AU  - Mukete Emmanuel Mbella
    Y1  - 2016/11/01
    PY  - 2016
    N1  - https://doi.org/10.11648/j.eco.20160505.11
    DO  - 10.11648/j.eco.20160505.11
    T2  - Economics
    JF  - Economics
    JO  - Economics
    SP  - 64
    EP  - 72
    PB  - Science Publishing Group
    SN  - 2376-6603
    UR  - https://doi.org/10.11648/j.eco.20160505.11
    AB  - The paper investigates the relationship between capital flight and economic development in the Cameroon economy during the period1970-2013. Applying the Fully Modified Least Squares (FMOLS) technique, we found evidence in support of a negative significant relationship between capital flight and economic development in Cameroon over the period of the study. Other variables with significant negative impact on economic development are external debt and exports. On the other hand, a factor such as real interest rate was found to associate positively with economic development.
    VL  - 5
    IS  - 5
    ER  - 

    Copy | Download

  • Sections