One of the purposes of this paper is to illustrate that all resident capital flows cannot be identified as capital flight, and that the response of the international community by merely observing resident capital flows can be overstated. The paper is organised along the following lines. Following an introduction, the next section presents trends in resident capital flows. Section III discusses the conceptual differences between resident capital flow as a one-way flow in response to the investment climate, resident capital outflows as one side of a two-way transaction and also resident outflows as a result of abnormal risks. This provides the basic rationale for the statistical exercise. Section IV describes the techniques adopted for the analysis and presents the results. The concluding section considers the main implications emerging from this analysis.
DFID, London, UK, 44 pp.