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What is Capital Flight?
Author(s) -
Kant Chander
Publication year - 2002
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/1467-9701.00436
Subject(s) - capital flight , counterintuitive , capital (architecture) , economics , work (physics) , developing country , econometrics , microeconomics , physics , economic growth , geography , archaeology , quantum mechanics , thermodynamics , incentive
This paper offers a definitive distinction between capital flight and capital outflows. It unifies and synthesises the capital flight concept as used in both theoretical and empirical work and shows that various definitions have two common elements. These are: (1) capital flight is a subset of capital outflows from developing countries by its residents; (2) these outflows must be motivated by risks and uncertainties that are peculiar to developing countries. The former points to the counter‐intuitive nature of these outflows. The latter gives these counterintuitive outflows’ explanation. We then propose an econometric method to measure this concept, and illustrate its use by applying it to Korea.