Impact of capital flight on economic growth in Zimbabwe (1980-2010)

Abstract

The study empirically examined the impact of capital flight on economic growth in Zimbabwe for the period 1980 to 2010, using the ordinary least squares (OLS) technique. In the estimated model, current and one-period lagged capital flight variables were found to be insignificant. However, two-period lagged capital flight reported a negative and significant impact on economic growth. The findings also indicate that while gross domestic investment positively affects economic growth, the occurrence of droughts has got a negative effect. Therefore, economic growth in Zimbabwe can be sustained through the adoption of policies that lessen the impact of capital flight. These include, drought mitigation measures and tax incentives that promote gross domestic investment.