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| Illicit Capital Flights and the Nigerian Economic Outputs Nexus: The Lucas Paradox Approach
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EGUGBO, R.U. (MSc., ACA)
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Abstract:
The current study examined the asymmetric effect of illicit capital flights on the growth of the Nigerian economy from 1999 to 2021. The illicit capital inflows proxies considered are: Repatriated Looted funds, Foreign Education and Medical Services Expenditure, and External debt servicing. Meanwhile, the economic output proxy considered is real gross/ domestic product-RGDP. The study controlled for political stability as well. Data for the study were gotten from both the World Bank annual reports and the Central Bank of Nigeria (CBN) bulletins. The Robust Least Square-RLS technique was adopted. The study reaffirmed that, repatriated looted funds improved RGDP significantly. However, political stability improves RGDP minimally. Again, both Foreign Education and Medical Services Expenditure, and External debt servicing reduces RGDP significantly. Consequently, the study concludes that, illicit capital flight is the reason behind the improved state of the Nigerian economy and that with strong institutional policies in place; the Nigerian economy will record high level of development. Hence, recommends that, to reduce the rising capital flight incidence, conscious efforts must be made to address the current macroeconomic volatilities in the Nigerian economy. Again, only those with good track record should be given political positions. Lastly, repatriated looted funds as well as borrowed funds should be used for productive purposes. Lastly, the Nigerian government should invest more on the educational and health care sector. This will help reduce the excuses made by public office holders.
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