Structural adjustment and the political economy of capital flight

The financial haemorrhaging of lower income countries in the form capital flight is a leading cause global economic inequality. On an annual basis, trillions dollars bypass already starved fiscal spaces nations mired poverty, making their way instead to lucrative offshore bank accounts governed by secrecy jurisdictions. present article relates this phenomenon institutional architecture system and provides causal evidence that structural adjustment programmes implemented at behest international organizations amplify such flight. In particular, isolating exogenous variation policy conditionalities through use instrumental variables, we find trade liberalization, sector reforms privatization measures mandated International Monetary Fund developing contexts substantially increase outflows occurring via current account transactions. Our findings thus document contribution makes underappreciated facet contemporary