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Title: Capital flight, tax revenue and economic growth in Sub-Saharan Africa: the role of good governance

Authors: James Atta Peprah; Harold Ngalawa; Evelyn Derera

Addresses: School of Economics, University of Cape Coast, Cape Coast, Ghana ' School of Accounting, Economics and Finance, University of KwaZulu-Natal, Durban, South Africa ' School of Management, Information Technology and Governance, University of KwaZulu-Natal, Pietermaritzburg, South Africa

Abstract: The study examines the moderating role of good governance indicators in the capital flight, tax revenue and economic growth relationship in 28 SSA countries. The data for the study spans from 1996 to 2018, and dynamic panel estimators were employed for the data analysis. As expected, the findings indicate that capital flight hinders economic growth in SSA whiles increasing tax revenue promotes growth. However, the effects of both capital flight and tax revenue on economic growth in sub-Saharan Africa are moderated by good governance indicators. In other words, with good governance, the drainage effect of capital flight on economic growth reduces significantly and the growth enhancing effect of domestic revenue mobilisation is increased. It is concluded, therefore, that policies that strengthen good governance are essential for Africa's growth prospects.

Keywords: capital flight; good governance; economic growth; Sub-Saharan Africa.

DOI: 10.1504/IJEPEE.2023.131054

International Journal of Economic Policy in Emerging Economies, 2023 Vol.17 No.3, pp.444 - 464

Accepted: 22 Apr 2022
Published online: 22 May 2023 *