Capital Inflows and Capital Flight – Individual Countries Experience

This paper examines whether individual countries’ data show that FDI inflows facilitate capital flight and whether capital flight occurs due to poor domestic investment climate or is it due to discriminatory treatment against residents’ investment. Three capital flight measures are used. Although the relationships have the expected signs, the absolute magnitude of the relation - ship among the countries differs widely. Also, the three measures of capital flight analyzed do not give consistent results. Thus, the definition and concept of capital flight that is actually used matters.