Causality between External Debt and Capital Flight in Sub-Saharan Africa

Fofack, Hippolyte

关键词: ACCESS TO DEBT;    ACCOUNTING;    ACCUMULATION OF DEBT;    ARREARS;    ASSETS;   

DOI  :  10.1596/1813-9450-5042
RP-ID  :  WPS5042

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Over the past few decades, the foreignliabilities of the majority of countries in Sub-SaharanAfrica have grown dramatically, propelling most nations intothe status of Highly Indebted Poor Countries, when theseliabilities reached unsustainable levels in the 1990s. Atthe same time, increases in capital flight from the regionfollowed a parallel trend, leading scholars to draw on"revolving door" models to explain the apparentpositive covariation of external debt and capital flight inthe region. This paper investigates the causality betweenexternal debt and capital flight in a cross-section ofSub-Saharan African countries using co-integration anderror-correction models. Although dual causality, which isconsistent with the revolving door hypothesis, cannot berejected for the majority of countries, empirical evidencehighlights the lead of external debt over capital flight.The significance of error-correction terms points to along-run co-integrating relationship between external debtand capital flight in a large number of countries.