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Impact of Capital Flight on Public Social Expenditure in Congo‐Brazzaville
Author(s) -
Moulemvo André
Publication year - 2016
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12185
Subject(s) - capital flight , economics , capital (architecture) , capital expenditure , public spending , social capital , public expenditure , development economics , economic growth , demographic economics , political science , macroeconomics , geography , politics , finance , market economy , public finance , archaeology , law , incentive
The economic literature has documented that a high level of capital flight affects domestic resource mobilization and development. However, some aspects of the effects of capital flight have not been adequately explored. This study assesses the effect of capital flight on public social expenditure in Congo‐Brazzaville. It shows, through a simulation exercise covering the 2000–2012 period, that the opportunity cost of capital flight translates into substantial losses in health and education expenditures, and thus significantly delays the achievement of the MDGs 4 and 5. This means that policies aimed at curbing capital flight may have a positive effect on the level of spending on health and education.