Macroeconomics and Monetary Economics - 1


  • Collective Authors


The relationship between capital flight and Foreign Direct Investment (FDI) has generated
continuous debate in literature. This study aims at providing quantitative analysis of cointegration and
causality between capital flight and FDI in Nigeria from 1985 to 2015. The study employed secondary
data which was obtained from Statistical bulletin of Central Bank of Nigeria and data base of World
Bank.The data obtained were subjected to Units root test, Co-integration test and Pair–Wise test of
Granger Causality. The findings of co-integration revealed that the estimated equation and the series
are co-integrated. The Granger-Causality test shows that there is no bi-directional causality between
FDI and Capital Flight in Nigeria.The study concludes that the success to curtail capital flight in Nigeria
is to improve level of infrastructural facilities in the country which can facilitate increase in domestic
investment and also attract FDI. It is recommended that enhancing investment environment by
minimizing the obstacles to doing economic activities, and increasing the effort against international
financial crime will help reduce capital flight and improve FDI in Nigeria.


Ajayi, S.I. (2005). Managing capital flight: Issues and challenges. Paper presented at a seminar tittled;
Capital flows and Economic Transformation in Nigeria, at the Central Bank of Nigeria’s 5th annual
monetary policy conference. CBN Conference Hall, Abuja.
Ayadi, F.S. (2008). Econometric Analysis of Capital flight in Developing Countries. 8th Global
Conference on Business and Economics. Florence, Italy, 12(13), pp. 18-49.
Bakare, M.O. (2011). Tax avoidance, Capital flight and Poverty in Nigeria: The Unpatriotic
Collaboration of the Elite, the Multinational Corporations and the Accountants: Some evidence.
Department of Management Studies. University of West Indies, Mona Kingston.
Bender, R. & Ward, K. (2009). Corporate Financial Strategy. Oxford: Elsevier Butterworth
Bertoni, F.; Colombo, M.G. & Grilli, L. (2013). Venture Capital Investor Type and the Growth Mode
New Technology-Based Firms. Small Business Economics, 40(3), pp. 527-552.
Bloom, N.; Sadun, R. & Van Reenen, J. (2015). Do Private Equity Owned Firms Have Better
Management Practices? American Economic Review, 10(5), pp. 442-46.
Cuddington, J.T. (1986). Capital flight estimates,Issues and Expenditures. America: Princeton Studies
in International Finance.
Dooley, M. (1988). Capital flight: A response to differences in Financial risks, fund staff papers.
International Monetary Fund, 35(3), pp. 422-436.
Eaton, J. (1987). Country risk and the Organisation of International Capital Transfer. In G. Calvo, R.
Findlay, P. Kouri and J. Macedo (eds). Debt, stabilisation and development. Oxford: Blackwell’s
Publishers Ltd.
Harris, R.S.; Jenkinson, T. & Kaplan, S.N. (2014). Private Equity Performance: What Do We. The
Journal of Finance, 69(5), pp. 1851-1882.
Jaaskelainen, M. (2012). Venture Capital Syndication: Synthesis and Future Directions. International
Journal of Management Reviews, 14(4), pp. 444-463.
Javorcik, B.S. (2004). Does Foreign Direct Investment Increase the Productivity of Domestic Firms?
In Search of Spillovers Through Backward Linkages. American Economic Review, 94(3), pp. 605-627.
Kant, C. (1998). Capital inflows and Capital flight:Individual Countries Experience. Journal of
Economic Integration, 13(6), pp. 644-661.
Khan, M. & UlHaque, N. (1987). Capital flight from Developing Countries. American Economic
Review, pp. 2-5.
Lerner, J. & Tåg, J. (2013). Institutions and Venture Capital. Industrial and Corporate Change.
American Economic Review, 22(1), pp. 153-182.
Lerner, J.; Pierrakis, Y. Collins, L. & Bravo B.A. (2011). Atlantic Drift: Venture Capital Performance
in the UK and the US. Loondon: NESTA.
Lessard, D.R. & Williamson, J. (1987). Capital flight and Third World Debt. Washington, DC: Institute
for International Economics.
Pastor, M. (1990). Capital flight and the Latin American debt crisis. Washington DC Economic Policy
Melusi, M. & Mabutho, S. (2015). Private Equity Capital in a Less Developed Economy: Evidence,
Issues and Perspectives. Acta Universitatis Danubius. OEconomica, 11(5), pp. 17-29.
Ndikumana, L.K. & Boyce, J.K. (2015). Public debts and Private assets. Explaining Capital flight from
Sub-Saharan African Countries. PERI Working Paper, 32.
Oloye, M. & Olatunji, O. (2015). Impact of Capital flight on Economic Growth in Nigeria. International
Journal for Innovation Education and Research, 8(3), pp. 10-37.
Schneider, B. (2003). Measuring Capital flight: Estimates and Interpretations. American Economic
Review, 8(6), pp. 40-50.
World Bank (1985). World Development Report. Washington D.C.