Capital Flight

Its Impact on Unemployment in Nigeria

Abstract

This study examines the impacts of capital flight on unemployment from 2006 to 2016. Capital flight is the sum of gross capital inflows and the current account deficit, less increases in foreign reserves. Some corrupt leaders and bureaucrats usually siphon scarce capital resources from their countries to advanced countries. These funds are therefore, not available for investment at home leading to decline in aggregate investment, low economic growth, hence declining in employment, increase poverty, increase in dependency ratio and high death rate. The study used the pool least square method to estimate the data from 2006 to 2016. The evidence, however, shows that capital flight had negative and significant impact on unemployment while external debt and foreign reserves has positive but significant impact on unemployment in Nigeria. Based on the empirical findings, it is recommended that the government should create an enabling environment for profitable investment and offer foreign investors attractive incentives as this will reduce the occurrence of capital flight from Nigeria and lead to investment of capital that would have left the country hence the creation of jobs to reduce unemployment in Nigeria.