Fiscal Policy and Capital Flight in Kenya

Abstract

Capital flight has been an issue of concern for Africa because it reduces the continent's much needed investible funds. In Kenya, the country lost US$ 4.9 billion in real terms from 1970 to 2010 through capital flight. This study seeks to provide fiscal evidence of capital flight in Kenya. The results establish that past capital flight, change in debt, and government expenditure have no significant impact on capital flight in Kenya. However, external debt, taxation, and expenditure practices under different political regimes have significant effects on capital flight. The study discusses policy implications emerging from the empirical results.

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.…”

Military Expenditure, Terrorism and Capital Flight: Insights from Africa

“…On the other hand, much of contemporary literature on African capital flight 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;…”

Fighting Capital Flight in Africa: Evidence from Bundling and Unbundling Governance

“…Accordingly, recent literature has focused on the lessons from case studies on the causes and consequences of capital flight (Ndikumana, 2016), inter alia: the relationship between capital flight and fiscal policy (Muchai & Muchai, 2016); determinants of capital flight in Ethiopia (Geda & Yimer, 2016) and Madagascar (Ramiandrisoa & Rakotomanana, 2016); trade misinvoicing and capital flight in Zimbabwe (Kwaramba et al, 2016); the nexus between capital flight and natural resources in Cameroon (Mpenya et al, 2016); public social spending and capital flight in Congo-Brazzaville (Moulemvo, 2016) and linkages between capital flight and tax revenue in Burkina Faso (Ndiaye & Siri, 2016).…”