Open AccessDYNAMICS OF EXTERNAL DEBT AND CAPITAL FLIGHT IN INDIA
Author(s) -
Swami Prasad Saxena,
Ishan Shanker
Publication year - 2016
Publication title -
scholedge international journal of management and development
Language(s) - English
Resource type - Journals
ISSN - 2394-3378
DOI - 10.19085/journal.sijmd030203
Subject(s) - capital flight , external debt , debt , economics , investment (military) , monetary economics , debt to gdp ratio , capital (architecture) , internal debt , debt levels and flows , debt crisis , debt ratio , macroeconomics , market economy , geography , archaeology , politics , political science , law , incentive
Countries at early stages of development have small stocks of capital and are likely to have investment opportunities with rates of return higher than those in advanced economies. The external debt for productive investment within reasonable levels enhances economic growth, but beyond certain levels additional indebtedness reduces growth. The mounting burden of debt servicing and debt crisis motivates capital flight, a paradoxical situation in which resources are flowing out of developing countries. This paper investigates the relationship between external debt and capital flight via TSLS (Two Staged Least Square Method). The results indicate positive relationship between external debt and capital Flight in India.