Do Efforts to Raise Tax Revenues Accelerate Capital Flight ? The Experience of African Countries

Abstract

This article examines the impact of tax revenue mobilization on capital flight in 30 African countries, focusing on the role of natural resources. Over the period 1998-2018, the econometric analysis is based on the dynamic generalized method of moments (GMM) and the main results of the study suggest that tax revenue mobilization reduces capital flight in Africa. However, when countries have more natural or oil resources, the negative impact of tax revenues on capital flight weakens. So, despite the importance of the benefits associated with natural resource wealth or, in particular, oil wealth, their presence compromises the impact of tax revenue mobilization on stemming capital flight. Finally, greater responsibility in the management of natural resources and more transparent reporting by companies operating in this sector are needed.