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Colombian Capital Flight

Published online by Cambridge University Press:  02 January 2018

Frank R. Gunter
Frank R. Gunter*
Affiliation:
Lehigh University
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Extract

Why is it that when an American puts money abroad it is called "foreign investment" and when an Argentinean does the same it is called "capital flight"? Why is it when an American company puts 30% of its equity abroad it is called "strategic diversification" and when a Bolivian businessman puts only 4% abroad it is called "lack of confidence"?

— Stephen C. Kanitz (1984)

Despite the Great difficulty in separating "good" international diversification from "bad" capital flight, the size and variance of these capital exports from developing countries have become a matter of increasing concern. According to some analysts, this capital flight has contributed to the sharp increase in foreign debt of developing countries, undermined the tax base, and — in extreme cases — even resulted in a net real capital transfer out of the country (Khan and Ul-Haque, 1985). This perception that capital flight might be undermining development efforts has led to a series of studies which have attempted to estimate the volume of capital flight. The best summary of this work is the conference proceedings edited by Lessard and Williamson (1987).

Type
Research Article
Information
Journal of Interamerican Studies and World Affairs , Volume 33 , Issue 1 , Spring 1991 , pp. 123 - 148
Copyright
Copyright © University of Miami 1991 

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