Title: DOES CAPITAL FLIGHT AFFECT MACROECONOMIC PERFORMANCE IN NIGERIA?
Authors:
Danladi, D. Jonathan (Phd), Falaye, Motunrayo Helen and Oyinemi, Ferdinard Y
Abstract:
This Study examined the effect of capital flight on macroeconomic performance in Nigeria for the period 1981 to 2019. It also ascertained the determinants of capital flight in Nigeria for the period 1981 to 2019. The error correction model was used for this study because the unit root test revealed all variables were stationary at first difference. This study utilized secondary data obtained from the World Bank dataset. The findings showed that external debt in the current period and the first lag, external debt in the current period, foreign direct investment in the current period, current account balance in the current period, interest rate in the current period and reserves in the first lag are significant determinants of capital flight in Nigeria. Also, the study revealed that capital flight negatively affects economic growth and investment in Nigeria. The study therefore recommends amongst others that external debt and foreign direct investment should be used for productive purposes such that capital flight as a result of inflow of funds from abroad is impossible and that stable exchange rate policies should be adopted to avoid devaluation which is a determinant of capital flight in Nigeria.
Keywords: Capital flight, Macroeconomic, Error Correction Model, Nigeria.
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