Capital flight and external debt in heavily indebted poor countries in Sub-Saharan Africa : an empirical investigation

Kwesi Ampah, Isaac and Kiss, Gábor Dávid and Kotosz, Balázs: Capital flight and external debt in heavily indebted poor countries in Sub-Saharan Africa : an empirical investigation. Challenges in national and international economic policies. pp. 135-159. (2018)

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Abstract

Over the past few decades, Sub-Saharan African countries, in their bid to achieve economic growth and development have resorted to external borrowings, propelling them to the status of Heavily Indebted Poor Countries (HIPC), when their debt reached unsustainable levels in the early 2000s. Unfortunately, the economies of these countries reported only steady growth with successive periods of high inflation and undesirable balance of payments deficits, leading scholars to ask whether external debt really can contribute to growth. At the same time, there is now considerable evidence that the build-up in debt was accompanied by increasing capital flight from the region. Employing Pooled Mean Group (PMG) estimation and datasets from 1990 to 2012, this paper investigated the apparent positive relationship between capital flight and external debt in Sub-Saharan Africa, taking Heavily Indebted Poor Countries in the region as a case study. The results revealed that external debt exerted a positive and statistically significant effect on capital flight both in short and long-run, suggesting that if foreign borrowing remains unchecked, it will continue to lead to massive capital outflow in Heavily Indebted Poor Countries in Sub-Saharan Africa.

Item Type: Article
Journal or Publication Title: Challenges in national and international economic policies
Date: 2018
Page Range: pp. 135-159
ISBN: 978-963-315-364-2
Uncontrolled Keywords: Gazdaságpolitika - nemzetközi - 21. sz.
Additional Information: Bibliogr.: p. 156-159. ; összefoglalás angol nyelven
Date Deposited: 2019. Apr. 26. 10:46
Last Modified: 2019. Apr. 26. 10:46
URI: http://acta.bibl.u-szeged.hu/id/eprint/57476

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