CEU Electronic Theses and Dissertations, 2008
| Author | Kuti, Zsolt |
|---|---|
| Title | CAPITAL FLIGHT FROM THE DEVELOPING COUNTRIES An investment risk based model |
| Summary | Abstract In the last three decades numerous developing countries suffered from the adverse impacts of fast capital outflow. In my thesis I concentrate on the explanation why and how these sudden shifts in the international capital movements occur. I set up a model investigating the behavior and the interplay of three different sectors; financial investors, governments and households. Using its outcomes, I determine how the single exogenous factors affect the optimal level of the developing country’s investment share. Afterwards, I define the concept of capital flight in my model and I set up two scenarios with different initial conditions, but with the same final result: because of the interplay of the different risk factors a circus vitious situation occurs and as a consequence the previously invested capital flee out of the country within a short period. The general message of the model is simple: a highly indebted and risky developing country can not save itself once the capital flight procedure launched. Secondly, the developing country does not have to be ‘guilty’ to suffer from capital flight. Thirdly, the developing country should avoid creating ‘stop and go’ cycles. Finally, ‘too’ fast capital inflow can cause serious problems as well. |
| Supervisor | Horváth, Julius |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2008/kuti_zsolt.pdf |
Visit the CEU Library.
© 2007-2021, Central European University