Governance, Capital flight and Industrialisation in Africa

Asongu, Simplice and Odhiambo, Nicholas (2019): Governance, Capital flight and Industrialisation in Africa. Forthcoming in: Journal of Economic Structures

Abstract

The study examines the role of governance in modulating the effect of capital flight on industrialisation in Africa. The empirical evidence is based on Generalised Method of Moments and governance is bundled by principal component analysis, namely: (i) political governance from political stability and “voice and accountability”; (ii) economic governance from government effectiveness and regulation quality; and (iii) institutional governance from corruption-control and the rule of law. First, governance increases industrialisation whereas capital flight has the opposite effect; and second, governance does not significantly mitigate the negative effect of capital flight on industrialisation. Policy implications are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Econometric modelling; Capital flight; Governance; Industrialisation; Africa
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C50 - General; F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

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