Capital Flight and Capital Controls in Developing Countries

Capital flight - the unrecorded export of capital from developing countries - often represents a significant cost for developing countries. It also poses a puzzle for standard economic theory, which would predict that poorer countries be importers of capital due to its scarcity. This situation is often reversed, however, with capital fleeing poorer countries for wealthier, capital-abundant locales. Using a common methodology for a set of case studies on the size, causes and consequences of capital flight in developing countries, the contributors address the extent of capital flight, its effects, and what can be done to reverse it. Case studies of Brazil, China, Chile, South Africa, Thailand, Turkey and the Middle East provide rich descriptions of the capital flight phenomena in a variety of contexts. The volume includes a detailed description of capital flight estimation methods, a chapter surveying the impact of financial liberalization, and several chapters on controls designed to solve the capital flight problem. The first book devoted to the careful calculation of capital flight and its historical and policy context, this volume will be of great interest to students and scholars in the areas of international finance and economic development.

Table of Contents:
Contents: Preface PART I: SETTING THE STAGE 1. Introduction Gerald Epstein 2. Capital Account Liberalization, Growth and the Labor Share of Income: Reviewing and Extending the Cross-Country Evidence Kang-kook Lee and Arjun Jayadev 3. Capital Flight: Meanings and Measures Edsel L. Beja, Jr. PART II: CAPITAL FLIGHT: CASE STUDIES 4. Capital Flight from South Africa, 1980–2000 Seeraj Mohammed and Kade Finnoff 5. The Determinants of Capital Flight in Turkey, 1971–2000 Anil Duman, Hakki C. Erkin and Fatma Gül Unal 6. Capital Flight from Thailand, 1980–2000 Edsel L. Beja, Jr., Pokpong Junvith and Jared Ragusett 7. A Class Analysis of Capital Flight from Chile, 1971–2001 Burak Bener and Mathieu Dufour 8. Capital Flight from Brazil, 1981–2000 Deger Eryar 9. A Development Comparative Approach to Capital Flight: The Case of the Middle East and North Africa, 1970–2002 Abdullah Almounsor 10. Capital Flight from China, 1982–2001 Andong Zhu, Chunxiang Li and Gerald Epstein PART III: POLICY ISSUES 11. Regulating Capital Flight Eric Helleiner 12. Capital Management Techniques in Developing Countries Gerald Epstein, Ilene Grabel and Sundaram Kwame Jomo 13. Africa’s Debt: Who Owes Whom? James K. Boyce and Léonce Ndikumana Index

About the Author :
Edited by Gerald A. Epstein, Professor of Economics and Co-Director, Political Economy Research Institute (PERI), University of Massachusetts-Amherst, US

Review :
'This book makes an important contribution to our understanding of capital flight from developing countries and deserves shelf space in every serious library.' 'One of the most significant developments in the global economy over the past 25 years has been the growth of international capital movements following the financial deregulation of the 1980s. Some argued that the removal of capital controls would lead to only a one-off adjustment. That has proved false. In addition to the continued high level of recorded short-term financial flows, this book documents the large scale unrecorded capital flights that have hit a number of developing countries. This book represents the most thorough and significant analysis and documentation of this important economic phenomenon.'