Capital Flight and Trade Misinvoicing in Zimbabwe

Abstract

This paper estimates trade misinvoicing in Zimbabwe from major trading partners using the Morgenstern (1963) methodology. It uses trade data from 1980 to 2014 from the United Nations Commodity Trade Statistics Database. The results show that unrecorded capital outflows occur through trade with different countries including Italy, United States, Germany, and China, while unrecorded capital inflows into Zimbabwe are mainly from South Africa, Belgium, and Australia. Trade misinvoicing occurs mostly in exports of diamonds, gold, and nickel. Misinvoicing through imports is not rampant and occurs mostly through Germany, South Africa, and Zambia. The results show that capital flight increased during the period of macroeconomic and political instability. This indicates the need to ensure political and macroeconomic stability to reduce capital flight.

Fighting African Capital Flight: Trajectories, Dynamics and Tendencies

“…The positioning of the research also departs from contemporary literature on capital flight which has been oriented towards, inter alia: the connection between fiscal policy and capital flight (Muchai & Muchai, 2016); lessons on causes and effects of capital flight from Africa (Ndikumana, 2016); the connection between capital flight and public social expenses in Madagascar (Ramiandrisoa & Rakotomanana, 2016) and Congo-Brazzaville (Moulemvo, 2016); insights into relationships between misinvoicing in trade and the flight of capital from Zimbabwe (Kwaramba et al, 2016); the nexus between natural resources and capital flight in Cameroon (Mpenya et al, 2016); how capital flight is related to tax income in Burkina Faso (Ndiaye & Siri, 2016); linkages between terrorism, capital flight and military expenditure (Efobi & Asongu, 2016;Asongu & Amankwah-Amoah, 2018); the institutional environment on the nexus between capital flows and capital flight (Gankou et al, 2016); the bundling and unbundling of institutions in the fight against capital flight (Asongu & Nwachukwu, 2017) and how terrorism sustains the addiction to capital flight .…”

Governance, capital flight and industrialisation in Africa

“…It is important to note that whereas the sample consists of 36 African countries, 35 countries may appear in the regression output because of issues in degrees of freedom associated with some variables used in the conditioning information set. na not applicable because at least one estimated coefficient needed for the computation of net effects is not significant and fiscal policy (Muchai and Muchai 2016); drivers of capital flight in Ethiopia (Geda and Yimer 2016) and Madagascar (Ramiandrisoa and Rakotomanana 2016); linkages between capital flight and tax revenue in Burkina Faso (Ndiaye and Siri 2016); public social spending and capital flight in Congo-Brazzaville (Moulemvo 2016); trade misinvoicing and capital flight in Zimbabwe (Kwaramba et al 2016) and lessons from case studies on the causes and consequences of capital flight (Ndikumana 2016). It is relevant to also clarify that the recommendation to boost good governance in order to mitigate capital flight and enhance industrialisation also builds on the fact that governance standards in Africa are comparatively low relative to other continents of the world.…”

Mitigating capital flight through military expenditure: Insight from 37 African countries

“…On the other hand, much of contemporary literature on African capital flight, for instance, has focused on inter alia, lessons from case studies on the causes and effects of capital flight (Ndikumana, 2016) notably: the nexus between fiscal policy and capital flight in Kenya (Muchai & Muchai, 2016), determinants of capital flight in Madagascar (Ramiandrisoa & Rakotomanana, 2016) and Ethiopia (Geda & Yimer, 2016), capital flight and trade misinvoicing in Zimbabwe (Kwaramba et al, 2016) and capital flight in Cameroon; connections between tax revenue and capital flight in Burkina Faso (Ndiaye & Siri, 2016) and the effect of capital flight on public social spending in CongroBrazzaville (Moulemvo, 2016). Our study adds to the growing body of liaterature on African by explicating the thresholds at which such military expenditure can dampen terrorism.…”