Capital Flight and Economic Development in Africa
"This paper takes a broad approach to the analyses and implications of capital flight for economic growth and development in Africa. It provides an overview of why capital flight constrains and undermines economic growth and development in Africa because of the resource gap which it exacerbates. Capital flight undermines domestic resource mobilization effort, reduces private domestic investment, and reduces the tax base, and thus brings about reduced public investment and social services. The analysis draws on a distinction between economic growth and development. In drawing out the distinction, the analysis goes beyond economic growth and covers the deeper issues of social development (wellbeing of citizens) as measured by the Human Development Index, and economic transformation. The paper deals with the issues of poverty and inequality. In addition the paper pushes the analysis to the implications of capital flight for developmental policy. Addressed in the paper also are issues of the quality of public finance and the absorptive capacity of a country in the event of reduced capital flight/ and capital flight repatriation and its implications for resource management and attainment of developmental objectives. Considered in particular with respect to absorptive capacity are macro-economic, institutional and policy, technical and managerial constraints."