Investigating the Impact Natural Resource Abundance on Capital Flight: Evidence from African Countries

This chapter aims to investigate the impact of natural resource abundance on capital flight in 10 African countries. For this purpose, the effects of natural resources rents, corruption index, total external debt stocks, and exchange rate on capital flight are examined for the period from 1990 to 2015 using second-generation panel data methodologies to take into account the possible cross-sectional dependence among selected African countries. The results show that natural resource abundance has a positive and statistically significant effect on capital flight. In addition, increasing corruption levels and external debt stock lead to an increase in capital escape from these countries. On the other hand, increasing the exchange rate does not have any significant effect on the capital flight in selected African countries.