Does Capital Flight Have a Force to Bear on Nigerian Economic Growth?

Abstract

The study presents a critical examination of the impacts of capital flight on Nigeria economic growth over a period of 30 years (1981-2010). The Johansen co-integration test was employed to investigate the dynamic relationship between capital flight and economic growth. Results show that there is a long run co-integration among the variables. Furthermore, that capital flight has negative impact on economic growth only holds in the short run. It was also discovered that capital flight significantly and positively influence Nigerian economic growth in the long run. The beneficial aspect of capital flight as revealed in this study was traceable to importation of capital/industrial goods payments for which constitute capital outflows and the uses of which transform to economic growth. Based on the empirical findings, it was recommended that creation of enabling/friendly business environment is a way of encouraging foreign investors to come and invest in the country as well as re-investing the profits and that curbing of political crisis with provision of infrastructures to reduce operating cost will be a right step in a right direction.