External DEBT And Capital Flight In Cameroon: Bounds Testing Approach
This paper analyses the relationship between external debt and capital flight in Cameroon for the period 1970-2010. Based on the limits of the approach of Johansen cointegration, we use the autoregressive Distributed lag (ARDL) methodology of cointegration of Pesaran and al. (2001) to determine the relationship between external debt and capital flight. The data used come from the Autonomous Sinking Fund of Cameroon, World Development Indicator of the World Bank and the base of Boyce and Ndikumana (2012). Our results show that in the short term, the rise of a dollar in external debt leads to an increase of 54 cents of capital flight; a situation which gradually decreases over time. Moreover, the capital flight of Cameroon is caused by official development assistance, trade openness and the rent from natural resources, particularly oil rents.
Cameroon; capital flight; Bounds testing approach; external debt
Ajayi, Ibi S. (1992). ‘An Economic Analysis of Capital Flight from Nigeria’, World Bank, Working Paper 993.
Beja, Jr. L. E. (2006). ‘Revisiting the Revolving Door: Capital Flight from Southeast Asia’, DESA Working Paper N°16, ST/ESA/ 2006/ DWP/16
Bendoma, M. (2012). ‘La fuite des capitaux en Afrique Centrale: Déterminants et effets sur la croissance économique’, Thèse de Doctorat, Université de Yaoundé II.
Boyce, J. K. (1992). ‘The revolving door? External debt and capital flight: Philippine case study’. World Development, 20 (3): 335-349
Boyce, J. K. and Ndikumana, L. (2012). ‘Capital Flight from Sub-Saharan African Countries: Updated Estimates, 1970-2010’, PERI Research Report, October.
Chipalkatti, N., Rishi M. (2001). ‘External Debt and Capital Flight in the Indian Economy’, Oxford Development Studies, 29 (1).
Engle R. F., GrangerC. W. J. (1987), ‘Co-Integration and Error Correction: Representation, Estimation, and Testing’ Econometrica, Vol. 55, No. 2., pp. 251-276.
Enns P K, Takaaki Masaki and Nathan J. Kelly (2014) ‘Time Series Analysis and Spurious
Regression: An Error Correction’. Cornell University
Johansen and Juselius, K., (1990). ‘Maximum Likelihood Estimation and Inference on Cointegration–with Applications to the Demand for Money’, Oxford Bulletin of Economics and Statistics, Vol. 52, No. 2, pp. 169–210
Johansen, S., (1988). ‘Statistical analysis of cointegration vectors’, Journal of Economic Dynamics & Control12, June-September, 2131-54.
Johansen, S., (1996). Likelihood-based inference in cointegrated vector autoregressive models. Oxford University Press, Oxford.
McKinnon, Ronald (1991). The Order of Economic Liberalization: Financial Control in the Transition to a Market Economy. Johns Hopkins University Press, Baltimore.
Narayan P K (2005), ‘The Saving and Investment Nexus for China: Evidence from Cointegration Tests’. Applied Economics 37(17): 1979- 1990
Pesaran, M.H., Shin, Y., Smith, R.J.(2001). ‘Bounds testing approaches to the analysis of level relationships’, Journal of Applied Econometrics 16, 289-326.
Phillips, P.C.B., Perron, P.,(1988). ‘Testing for a unit root in time series regression’, Biometrica 75, 335-446.