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Measuring Capital Flight: Estimates and Interpretations

Working paper

Working paper

Capital flight is a phenomenon, which though unobservable, is still assumed to be widely prevalent in developing countries. This paper reviews the methods adopted in the literature to estimate capital flight and provides corresponding estimates for a large data set of 116 countries for the period 1971-1998. This exercise was motivated by the fact that that we had no record of recent experience and that the compilation procedures for Balance of Payments at the IMF - on which these estimates are based - has changed since 1995. This paper thus provides evidence of resident capital outflows and makes the case for country specific case studies to interpret these numbers as capital flight. The estimates provide a useful database for carrying out further research on capital flight and can be used in conjunction with recorded flows to analyse movements of capital in developing countries.

Benu Schneider