Papers by LEONCE NDIKUMANA
Oxford University Press eBooks, Nov 6, 2014
Social Science Research Network, 2002
We investigate the determinants of capital flight from 30 sub-Saharan African countries, includin... more We investigate the determinants of capital flight from 30 sub-Saharan African countries, including 24 countries classified as severely indebted low-income countries, for the period 1970-1996. The econometric analysis reveals that external borrowing is positively and significantly related to capital flight, suggesting that to a large extent capital flight is debt-fueled. We estimate that for every dollar of external borrowing in the region, roughly 80 cents flowed back as capital flight in the same year. Capital flight also exhibits a high degree of persistence in the sense that past capital flight is correlated with current and future capital flight. The growth rate differential between the African country and its OECD trading partners is negatively related to capital flight. We also explore the effects of several other factors-inflation, fiscal policy indicators, the interest rate differential, exchange rate appreciation, financial development, and indicators of the political environment and governance. We discuss the implications of the results for debt relief and for policies aimed at preventing capital flight and attracting private capital held abroad.
Review of Development Economics, Nov 29, 2022
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Journal of International Development, Mar 14, 2016
While many developing countries have made progress in human development, gender equality remains ... more While many developing countries have made progress in human development, gender equality remains a challenge for most. This study uses data on bilateral official aid disbursements from the OECD Development Assistance Committee (OECD-DAC) to examine the impact of aid and its sectoral allocation on overall gender inequality as well as on gender inequality in health and education. We find that the impact of aid on gender inequality is dependent on initial human development and per capita income. However, increased aid to the health and education sectors appears to be effective in reducing maternal mortality and gender inequality in youth literacy regardless of initial conditions.
African Development Review, Apr 1, 2016
This introduction distills the key findings and messages from the papers published in this issue,... more This introduction distills the key findings and messages from the papers published in this issue, which consist of eight case studies on the causes and effects of capital flight from Africa. The case studies contribute to the literature by providing evidence that enables us to assess the validity and generalizability of the findings from cross‐sectional and panel data studies. The evidence from the case studies confirms important empirical regularities on the causes of capital flight. In particular, the results confirm that external borrowing fuels capital flight, and that trade misinvoicing is an important channel of capital flight, especially in the case of natural resource‐rich countries. The studies also underscore the important role of good institutions in alleviating the risks of capital flight, while political instability is found to be a driver of capital flight. The evidence from case studies provides valuable insights for the design of strategies aimed at curbing and preventing capital flight from Africa.
Review of Development Economics, May 30, 2023
RePEc: Research Papers in Economics, May 8, 2010
This paper examines the question of whether inflation targeting monetary policy is an appropriate... more This paper examines the question of whether inflation targeting monetary policy is an appropriate framework for sub-Saharan African countries. The paper presents an overview of inflation targeting, reviews the justification for the regime, and summarizes some major critiques. Monetary policy responses to inflation depend on the source of inflationary pressures. Therefore, the determinants of inflation in African countries are investigated, using dynamic panel data, and the implications for inflation targeting are discussed. These issues are examined in greater detail for the two African countries which have formally adopted inflation targeting, South Africa and Ghana. The analysis is placed in the context of the global economic crisis. The paper concludes with a discussion of alternative approaches to monetary policies and the institutional constraints that would need to be addressed to allow central banks to play a stronger developmental role in sub-Saharan African countries.
RePEc: Research Papers in Economics, May 25, 2009
Deep Blue (University of Michigan), Dec 1, 2011
Limited access of entrepreneurs to credit constrains the creation and growth of private firms. In... more Limited access of entrepreneurs to credit constrains the creation and growth of private firms. In Africa, access to credit is particularly limited for small and medium enterprises (SMEs) due to unclear property rights and the lack of assets that can be used as collateral. This paper presents a model where firm creation and growth hinge on matching potential entrepreneurs with productive technologies, while firm growth depends on acquired capital. The shortage of collateral creates a binding credit constraint on borrowing by SMEs and hence private sector growth and employment, even though the banking sectors have ample liquidity, as is the case in many African countries. The model is tested using a sample of 20 African countries over the period 2005-09. The empirical results suggest that policies aimed at easing the binding credit constraints (e.g., the depth of credit information and the strength of legal rights pertaining to collateral and bankruptcy) would stimulate productive entrepreneurship and private sector employment in Africa.
Edward Elgar Publishing eBooks, May 27, 2005
Oxford University Press eBooks, Nov 6, 2014
This paper assesses the impact of capital flight on growth in thirty-one sub-Saharan African coun... more This paper assesses the impact of capital flight on growth in thirty-one sub-Saharan African countries. It first considers the "macro fundamentals" hypothesis that capital flight would be lower in a country whose government adhered to "sound" macroeconomic policies. Analytical considerations fail to support this hypothesis. Second, it develops a growth estimating equation derived from the Harrod-Domar framework. The growth estimations support the conclusion that capital flight had a major impact on growth over the last three decades, 1980-2010. The negative impact was greatest for the petroleum-exporting countries and those affected by internal conflict, but it was also substantial for the other countries, with a few exceptions.
WIDER Working Paper
provides economic analysis and policy advice with the aim of promoting sustainable and equitable ... more provides economic analysis and policy advice with the aim of promoting sustainable and equitable development. The Institute began operations in 1985 in Helsinki, Finland, as the first research and training centre of the United Nations University. Today it is a unique blend of think tank, research institute, and UN agency-providing a range of services from policy advice to governments as well as freely available original research. The Institute is funded through income from an endowment fund with additional contributions to its work programme from Finland, Sweden, and the United Kingdom as well as earmarked contributions for specific projects from a variety of donors.
World Development
This paper combines geocoded subnational data on the location of water, sanitation and hygiene (W... more This paper combines geocoded subnational data on the location of water, sanitation and hygiene (WASH) aid projects in Uganda with nationally representative household-level panel survey data to evaluate the impact of WASH aid on access to water and on the burden of water collection. Specifically, it examines whether proximity to aid-funded WASH projects improves household access to improved water sources and reduces the time burden of water collection. Our results suggest that while aid-funded WASH projects increase household access to improved sources of water, households may also see the time burden of water collection increase, as they may need to travel longer distances and also experience longer wait times due to congestion at water service points. This is an indication that the supply of improved water sources is still insufficient relative to demand as measured by the population density.
Energy Research & Social Science, 2021
Policy Research Working Papers, 2021
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Journal of African Development
National development banks remain an important part of modern financial systems in developed as w... more National development banks remain an important part of modern financial systems in developed as well as developing countries. They play an important role in providing long-term financing and countercyclical financing during financial and economic crises. In this context, this article aims to provide empirical evidence of the role of national development banks in Africa in providing medium-term and long-term credit and their performance in managing resources, using bank-level data from selected countries and the BankFocus database (maintained by Fitch and Bureau Van Dijk). The empirical results show that while national development banks do not lend more relative to commercial banks, they outperform the latter in focusing on medium-term and long-term loans, which is consistent with their mandate. The results further confirm that national development banks incur more risk, resulting in relatively higher nonperforming loan ratios. As expected, national development banks are not more pro...
This paper examines the question of whether inflation targeting monetary policy is an appropriate... more This paper examines the question of whether inflation targeting monetary policy is an appropriate framework for sub-Saharan African countries. The paper presents an overview of inflation targeting, reviews the justification for the regime, and summarizes some major critiques. Monetary policy responses to inflation depend on the source of inflationary pressures. Therefore, the determinants of inflation in African countries are investigated, using dynamic panel data, and the implications for inflation targeting are discussed. These issues are examined in greater detail for the two African countries which have formally adopted inflation targeting, South Africa and Ghana. The analysis is placed in the context of the global economic crisis. The paper concludes with a discussion of alternative approaches to monetary policies and the institutional constraints that would need to be addressed to allow central banks to play a stronger developmental role in sub-Saharan African countries.
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Papers by LEONCE NDIKUMANA