Capital Flight versus Domestic Investment in Developing Countries: An Empirical Analysis from Nigeria

Adetiloye, K. A. (2012) Capital Flight versus Domestic Investment in Developing Countries: An Empirical Analysis from Nigeria. International Journal of Economics and Finance, 4 (2). pp. 175-186. ISSN 1916-971X E-ISSN 1916-9728

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Abstract

Capital flight is a challenge for many developing countries of the world. The problem is more acute in a country like Nigeria where domestic investment has been severely affected. The study undertakes an empirical investigation of the problem using variables of investment, exchange rates and others in a vector error correction mechanism and the ordinary least regression analyses to test the level of significance of the impacts of each of the adopted variables. The results indicate that capital flight has negative but insignificant impact on domestic investment in Nigeria. This is as a result of the high level of capital flight or low level of investment undertaken over the years in the economy. The basic variable involved in the two is the exchange rate which is significant in investment but insignificant in capital flight. The paper recommends further floating of the exchange rate and transparency in its management. It also recommends that policies to encourage autonomous investment by both private and public sector be put in place.

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Mrs Patricia Nwokealisi
Date Deposited:	08 Nov 2013 19:20
Last Modified:	08 Nov 2013 19:20
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/1841

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