An Empirical Evaluation of the Impact of Capital Flight on Economic Development in Nigeria

Abstract

This study evaluates the Impact that capital flight has on economic development in Nigeria. Data were obtained from secondary sources; Central Bank of Nigeria Statistical bulletin of 2018. Gross fixed capital formation was employed as the explained variable while capital flight data; exchange rate and foreign direct investment were used as the explanatory variables.  Pre- estimation test revealed that the time series data were integrated of 1(0) and 1(1) variables, autoregressive Distributed Lag (ARDL) Model was utilized for analysisng data. Several diagnostic tests such as auto-correlation test, Ramsey stability test, serial correlation test and test for heteroscedasticity were also carried out and they all confirmed the reliability and validity of the model employed.  Findings reveal that: capital flight has negative and significant impact on development in Nigeria. The research concludes that capital flight impacted economic development in Nigeria negatively across the period covered by this study. The study recommend that government of Nigeria should come up with policies that would curb the volume of capital flight out from Nigeria, they should also provide enabling and conducive environment through the formulation of good economic policies that would encourage investors to keep their capital here in the Nigerian economy instead of repatriating them overseas.