Does Capital Flight Affect Macroeconomic Performance in Nigeria?

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.

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Foreign Direct Investment Led Growth Hypothesis and Economic Development in Nigeria

Randwick International of Social Science Journal ◽

10.47175/rissj.v2i4.320 ◽

2021 ◽

Vol 2 (4) ◽

pp. 376-393

Author(s):

Ubong Edem Effiong ◽

Nora Francis Inyang

Keyword(s):

Economic Development ◽

Foreign Direct Investment ◽

Direct Investment ◽

Unit Root Test ◽

Secondary Data ◽

Short Term ◽

Causality Test ◽

Bounds Test ◽

Growth Hypothesis

This study was an inquiry into the nexus of the foreign-direct investment (FDI) led growth hypothesis, and how it translates into the development of the Nigerian economy as of 1970 – 2018. The study utilized secondary data from the ‘World Development Indicators’ which were analysed using the Bounds test for cointegration and the ‘autoregressive distributed lag (ARDL) approach to divulge both the short-term cum the long-term influence of foreign direct investment net inflow on ‘economic development’ of Nigeria. The Bounds test was conducted after the unit root test revealed that the variables were stationary at mixed order of level and first difference. The outcome of the ARDL Bounds test supported confirmation of long-term association among the variables. The ARDL short-run error correction showed that 14.62% of the instability in the model was corrected yearly. In the short-term, it was discovered that FDI wielded a deleterious and substantial weight on ‘economic development of Nigeria. Meanwhile, the long-term estimates indicated that FDI influenced economic development positively, though not in a significant manner. The Granger causality test supported the fact that FDI causes ‘economic development’ in Nigeria. Given this potential of FDI exerting a positive effect on ‘economic development’, the paper recommended that bottlenecks inherent in FDI influxes in the country should be removed so as to reap the fullest benefits of such inflows in Nigeria.

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Analysis of Capital Flight in Developing Countries: A Study on Turkey between 1980 and 2010

International Conference on Eurasian Economies 2013 ◽

10.36880/c04.00702 ◽

2013 ◽

Author(s):

Ali Özer ◽

Aslı Cansın Doker ◽

Adem Türkmen

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Consumer Price Index ◽

External Debt ◽

Estimation Method ◽

Ordinary Least Squares ◽

Capital Flight ◽

Causality Test ◽

Macroeconomic Variables ◽

Long Run

The aim of this study is to determine whether there is a relationship between Capital flight and some macroeconomic variables by using anual data between 1980 and 2010 in Turkey. Capital flight measured by World Bank (1985) method, was used as dependent variable and external debt, foreign direct investment, uncertainty, real GDP growth, exchange rates, trade balance and consumer price index were used as independent variables. Ordinary Least squares estimation method, Johansen-Jeselius cointegration test, Granger causality test and variance decomposition results produced by VEC model were used in the study. After those econometrics and economics analysis, this paper put forward that there is a long run relationship between some macroeconomic variables and capital flight.The results show external debt, foreign direct investment inflows, and foreign reserves to be the major effector of capital flight.

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ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI “CAPITAL FLIGHT” DI INDONESIA (Period Kuartal I 1990 s.d. Kuartal IV 2000)

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v6i2.325 ◽

2004 ◽

Vol 6 (2) ◽

pp. 12-31

Author(s):

Navik Istikomah

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Interest Rate ◽

Exchange Rates ◽

Stability Condition ◽

Direct Investment ◽

External Debt ◽

Political Stability ◽

Capital Flight ◽

Series Data

The purpose of this research is to identify the problems of the effect of economic variables, that is, changes of exchange rates Rp/US$, external debt, economic growth, inflation, differences of interest rate of Indonesian- America, Foreign Direct Investment, political stability condition, on capital flight in Indonesia, for period 1st quarter, 1990 – 4th quarter, 2000. The determinants of capital flight in Indonesia use cointegration equation model of Likelihood Johansen’s. The estimation completed by time series data validity, that is, unit-roots-test and co-integration-test.The result of research indicate that independent variable on model, that is, changes of exchange rates Rp/US$, external debt, economic growth, inflation, differences of interest rate of Indonesian-America, Foreign Direct Investment, and political stability condition, on the long run could explain changes of capital flight about 58,85 percent and altogether significant (computed-F = 7,1520 > value-F = 3,192). Partially, knowed that all variable on model, exceptly inflation and differences of interest rate of Indonesia-America, to have significant influence on capital flight in Indonesia. All variable sufficient stationery-condition at first different and the model could cointegrated at first different.Keywords: Capital Flight and determinant factors, and Cointegration of Johansen’s Likelihood

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Macro Determinants of Foreign Direct Investment in Lebanon

Asian Social Science ◽

10.5539/ass.v17n10p10 ◽

2021 ◽

Vol 17 (10) ◽

pp. 10

Author(s):

Sarah Chehade

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Secondary Data ◽

Economic Stability ◽

Foreign Investments ◽

Correction Model ◽

Macroeconomic Variables ◽

Vector Auto Regression ◽

The Impact ◽

Auto Regression

This paper is concerned with identifying and analysing the impact of selected macroeconomic variables on foreign direct investment (FDI) in Lebanon. Toward this purpose, the analysis will be based on secondary data collected for the period standing between 1990 and 2018 to implement the Vector Auto Regression (VAR) and Error correction model (ECM) techniques. The results reveal that Gross Domestic Product (GDP), deposit interest rate and debt are correlated with FDI. While trade was found statistically an insignificant variable for FDI inflow. The findings of the study recommend that establishing and maintaining economic stability and growth will spurs foreign investments in Lebanon.

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Hypotheses Testing: Capital Flight and Human Development Index in Nigeria

South Asian Journal of Social Studies and Economics ◽

10.9734/sajsse/2021/v12i430325 ◽

2021 ◽

pp. 173-190

Author(s):

Emmanuel Uzoma Makwe ◽

Augustus N. Gbosi ◽

Clever A. Gbanador

Keyword(s):

Foreign Direct Investment ◽

Human Development ◽

Human Development Index ◽

Direct Investment ◽

External Debt ◽

Capital Flight ◽

National Bureau ◽

Development Index ◽

Long Run ◽

Financial Account

This study examined Capital Flight and human development index in Nigerian. Capital Flight was proxied by foreign direct investment abroad, external debt servicing, external reserves and capital and financial account deficits. Based on the study objectives, relevant literature were reviewed and evaluated. Relevant data were extracted from the annual Statistical Bulletin of the Central Bank of Nigeria and the National Bureau of Statistics. Unit root test was conducted using Augmented Dickey Fuller method which revealed that the variables were integrated at level and first difference: necessitating the use of autoregressive distributive lag/bonds test to explore the long run relationship existing among the variables in the model and the result showed that the variables in the model were co-integrated thus we proceeded in evaluating the long run as well as the co-integrating form in the model. From the result of the various tests, it was revealed that capital and financial account deficit, external debt servicing and external reserve were positively related to human development index while foreign direct investment outflows was negatively related to human development index. Also, capital and financial account deficit, external reserve and foreign direct investment outflow were significant while external debt servicing was not significant. Based on the findings from the analysis, the study recommended amongst others, that external debt acquired should be judiciously used for infrastructural development that would encourage investments which would ultimately bring about economic growth as well as enhance human development in Nigeria.

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Corporate Taxes and Foreign Direct Investment: An Impact Analysis

GATR Journal of Accounting and Finance Review (AFR) Vol. 4 (4) Oct-Dec 2019 - GATR Accounting and Finance Review ◽

10.35609/afr.2020.5.2(1) ◽

2020 ◽

Vol 5 (2) ◽

pp. 28-43

Author(s):

Onome Christopher Edo ◽

Anthony Okafor ◽

Akhigbodemhe Emmanuel Justice

Keyword(s):

Foreign Direct Investment ◽

Error Correction ◽

Direct Investment ◽

Impact Analysis ◽

Negative Relationship ◽

Value Added ◽

Positive Association ◽

Error Correction Model ◽

Corporate Taxes ◽

Correction Model

Objective – The purpose of this study is to investigate the effect of corporate taxes on the flow of Foreign Direct Investment (FDI) in Nigeria between 1983 and 2017. Methodology/Technique – This study adopts an ex-post facto research design. Secondary data was sourced from the World Bank Development Indicator, the Central Bank of Nigeria database, and the Federal Inland Revenue database. The research data was analyzed using the Error Correction Model (ECM). Findings – The coefficient of determination (R2) shows that approximately 77% of systematic changes in FDI are attributed to the combined effect of all of the explanatory variables used in this study. Specifically, the study concludes that Company Income Tax, Value Added Tax, and Custom and Excise Duties have a significant but negative relationship with FDI. In contrast, Tertiary Education Tax has a positive association with FDI. Further, Exchange Rate has a negative but significant relationship with FDI, Inflation had an insignificant but positive association with FDI, and GDP growth Rate and Trade Openness demonstrate a positive and significant association with FDI. Novelty – The findings of this study are distinguishable from previous studies, as it uncovers new evidence that higher Education Tax Rates influences FDI and emerging evidence on the effect of non-tax variables on FDI inflow. Type of Paper: Empirical. JEL Classification: E22, F21, H2, P33. Keywords: Corporate Taxes; Foreign Direct Investment; Error Correction Model; Nigeria; Non-Tax Variables. Reference to this paper should be made as follows: Edo, O.C; Okafor, A; Justice, A.E. 2020. Corporate Taxes and Foreign Direct Investment: An Impact Analysis, Acc. Fin. Review 5 (2): 28 – 43. https://doi.org/10.35609/afr.2020.5.2(1)

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Agricultural Sector FDI and Economic Growth in Saarc Countries

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.b1019.0982s1019 ◽

2019 ◽

Vol 8 (2S10) ◽

pp. 116-121

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Direct Investment ◽

Agricultural Sector ◽

South Asians ◽

Secondary Data ◽

Agricultural Products ◽

Fdi Inflows ◽

Important Relationship ◽

The Relationship

The study seeks to establish the relationship between foreign direct investment to Saarc region agricultural sector and economic growth with secondary data. SAARC comprises 3% of the world's area, 21% of the world's population and 3.8% (US$2.9 trillion) making up a total of 3% of the world’s area. The country has second in all over the world in terms of agriculture position. The population obliquely all of the member states is over 1.7 billion, accounting for 21% of the world’s total population. In their 42% of the agricultural operation in SAARC nations and also 51% source of livelihood of the South Asians. The study has revealed that India alone accounts for 52 per cent of the agricultural products using the SAARC region peoples. For the present study, a total of 34 groups related to the agricultural products were selected out of the total groups. The techniques employed to analyze the data include descriptive statistic, correlation and linear forecast method. The study also revealed a positive and important relationship between economic growth and foreign direct investment flow to the agricultural sector. Thus, the study recommends that policy should focus on flexible trade policies to attract more foreign direct investment (FDI) inflows to SAARC nations. i.e. Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka including India

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Macroeconomic Variables and Foreign Direct Investment Inflows in Turkey

Signifikan Jurnal Ilmu Ekonomi ◽

10.15408/sjie.v8i2.10560 ◽

2019 ◽

Vol 8 (2) ◽

Author(s):

Saliha Meftah ◽

Abdelkader Nassour

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Short Term ◽

Causality Test ◽

Correction Model ◽

Vector Error Correction ◽

Macroeconomic Variables ◽

Vector Error ◽

Causality Relationship

Foreign direct investment (FDI) is an essential factor in the development of a country. This study aims to examine what factors influence foreign direct investment. By using the vector error correction model, the research shows that there is a long-term causality relationship between exchange rates and inflation with FDI. However, in the short term, there are no variables that affect FDI. Besides, the Granger causality test shows causality in the direction of GDP and FDI, while other variables do not have causality. This research has implications for policymakers to pay attention to macroeconomic variables in increasing the flow of foreign direct investment.

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Foreign Direct Investment, External Debt, and Balance of Payment: A Causality Analysis for Bangladesh

Bangladesh Journal of Public Administration (BJPA) ◽

10.36609/bjpa.v27i2.67 ◽

2020 ◽

Author(s):

Muhammad Mahmud Mostafa

Keyword(s):

Foreign Direct Investment ◽

Granger Causality ◽

Direct Investment ◽

Negative Impact ◽

External Debt ◽

Causality Analysis ◽

Causality Test ◽

Long Run ◽

Significant Negative Impact ◽

Short Run

The purpose of this study is to analyze the causal relationship of external debt and balance of payment with foreign direct investment (FDI) in Bangladesh for the period of 1980 to 2017 through the application of Johansen Cointegration technique, Vector Error Correction Model (VECM), and Granger Causality approach. Results of cointegration and VECM indicate a significant long-run relationship between dependent (FDI) and independent variables (external debt and balance of payment). External debt is found to have a significant negative impact on FDI in the long-run, but it is found insignificant in the short-run. In contrast, the balance of payment has a significant positive effect on FDI both in the long-run and short-run. Results of the Granger causality test reveal that there exists bidirectional short-run causality between the balance of payment and FDI; that is, both the balance of payment and FDI affect each other. But no unidirectional or bidirectional short-run causality is found between external debt and FDI. Keywords: FDI, external debt, balance of payment, cointegration, VECM, causality

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DETERMINAN ALIRAN FOREIGN DIRECT INVESTMENT DI INDONESIA (PENDEKATAN MODEL DUNNING)

Media Trend ◽

10.21107/mediatrend.v11i2.1541 ◽

2016 ◽

Vol 11 (2) ◽

pp. 141

Author(s):

Claudia TeziaJanuarita Putri ◽

Regina Niken Wilantari

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Descriptive Analysis ◽

Capital Inflow ◽

Economic Shocks ◽

Short Term ◽

Economic Openness ◽

Correction Model ◽

Investment Opportunities

Traffic capital across countries is one of investment opportunities from domestic and abroad to stimulate the economic growth of developing countries. Compared to other forms of capital, Foreign Direct Investment is the flow of capital is long-term and relatively not as vulnerable to economic shocks. The aim of this study is to see the performance of FDI movement as a capital inflow in Indonesia and to explores whether factors that affect FDI using Dunning’s ecletic model. This study focused on two basic analysis, descriptive analysis and quantitative analysis using the Error Correction Model (ECM). The results of short-term ECM estimate shows that FDI is influenced by inflation and the degree of economic openness. Furthermore, the result in the long term ECM estimate show that only variable that infrastructure does not significantly affect the movement of FDI in Indonesia.

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