Terrorism and Capital Flight from Africa

International Economics, 148 (December), pp. 81-94 ( 2016).

African Governance and Development Institute WP/16/022

26 Pages Posted: 7 Jul 2016 Last revised: 12 Dec 2016

See all articles by Uchenna Efobi

Uchenna Efobi

Covenant University

Simplice Asongu

African Governance and Development Institute

Date Written: January 1, 2016

Abstract

We assess the effects of terrorism on capital flight in a panel of 29 African countries for which data is available for the period 1987-2008. The terrorism dynamics entail domestic, transnational, unclear and total terrorisms. The empirical evidence is based on Generalised Method of Moments (GMM) with forward orthogonal deviations and Quantile regressions (QR). The following findings are established. First, for GMM, domestic, transnational, unclear and total terrorisms consistently increase capital flight. Second, for QR, with the exception of transnational terrorism for which a positive effect on capital flight is apparent in the 0.90th quintile, terrorism dynamics affect capital flight in low quintiles of the capital flight distribution. In other words, terrorism increases capital flight for the most part when initial levels of capital flight are low. Policy implications are discussed.

Keywords: Africa; Capital flight; Foreign capital; Terrorism; Violence

JEL Classification: C50; D74; F23; N40; O55

Suggested Citation

Efobi, Uchenna and Asongu, Simplice, Terrorism and Capital Flight from Africa (January 1, 2016). International Economics, 148 (December), pp. 81-94 ( 2016).; African Governance and Development Institute WP/16/022. Available at SSRN: https://ssrn.com/abstract=2804320

Uchenna Efobi

Covenant University ( email )

P.M.B. 1023
Km 10 Idiroko road
Ota, Ogun State 234
Nigeria
+48036273494 (Phone)

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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