Multinational enterprises and capital flight from host African nations: An xray of the challenges of retaining trade revenues for continental development
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Date
2021
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Research Gate
Abstract
Orientation: Multinational enterprises (MNEs) have been documented to significantly influence the socio-economic fortunes of their host nations particularly in Africa and most of the ‘developing world’. Research purpose: Whilst it is not disputed that some of these MNEs bring a measure of ‘economic value’ to their host nations in Africa, reports also abound to the effect that they sometimes serve as conduits for the repatriation of vast sums of money to their home countries or ‘safe havens’ outside of their host nations. From a purely social scientific, human development point of view, this paper, as a preliminary empirical effort, examines how the reported phenomenon of capital flight from selected African countries could potentially negatively affect the lot of the host nations of MNEs. Motivation for the study: There is a need to put into empirical perspective some of the factors plaguing the socio-economic development of Africa. This paper undertakes that task from the perspective of capital flight from selected African host nations of MNEs. Research design, approach, and method: Drawing largely from anecdotal and popularly reported cases from, at least, three geographical regions of the continent. This paper employs targeted systematic reviews and case research of selected reported cases to analyse the phenomenon under consideration. This interpretivist, qualitative approach was adopted with a view to put forward a somewhat empirical evidence of the potential socio-economic effects on human development indicators occasioned by capital flight from the continent. Main finding(s): As is to be expected, the study determined that the phenomenon of capital flight is a reality though often shrouded in largely complex, sometimes opaque channels and practices. It was further found that whilst the human development impacts can often be gleaned, the extent of the economic effect, though enormous in monetary terms, cannot always be precisely determined. Practical implications: One of the ‘practical values of this type of study is that it enables the extrapolations that can be undertaken by monetary or other economists to project the economistic impact of MNEs on their host nations in Africa thus advancing the vigilance that would be necessary to mitigate against the potential negative impact of capital flight on the development of the host nations. Contributions: Loosely straddling the fields of Development Economics and Human Capital Development the paper promotes the interrogation of often difficult phenomena to trigger the debates that are necessary to advance development in Africa from a trans-disciplinary viewpoint.
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Keywords
Multi-national Enterprises (MNEs), Human Development Index, Capital Flight, Poverty, International Trade.