On the Definition and Magnitude of Recent Capital Flight
54 Pages Posted: 27 Apr 2000 Last revised: 21 Sep 2010
Date Written: June 1987
This paper presents a survey of alternative definitions of capital flight and empirical estimates of capital flight utilizing a common database. At the conceptual level, we argue that the definition of capital flight requires a somewhat arbitrary distinction between normal capital flows and those representing capital flight. At the empirical level, our results illustrate the range of estimates of capital flight that are possible and how alternative definitions or databases contribute to the dispersion of estimates. Our results show that for some countries, differences in definitions or databases may have substantial effects, causing some estimates of capital flight to be positive and others negative. We argue that an appropriate definition of capital flight is one that is consistent with the kinds of economic questions under consideration. In theory, capital flight should be viewed within the context of a general equilibrium model. When this is done, capital flight will appear to be a symptom of underlying economic forces rather than a cause of national welfare losses.
Suggested Citation: Suggested Citation