Wednesday, October 17, 2012

New report: Staggering Levels of Capital Flight from North African Countries Uncovered

Press Release: Staggering Levels of Capital Flight from North African Countries Uncovered

A report by Léonce Ndikumana and James K. Boyce, Political Economy Research Institute, University of Massachusetts, Amherst

Amherst, Massachusetts, October 16, 2012 -- Following the “Arab Spring” revolutions in North Africa, attention has turned to the restoration of social justice and equal opportunity for all in the region. The new agenda includes the recovery of national wealth stolen by the former rulers, their families and associates. It is difficult to obtain an accurate account of the volume of stolen funds, as they are carefully concealed in bank accounts and physical assets held abroad with the complicity of a shadow global financial system.

In “Capital Flight from North African Countries,” a new report from the Political Economy Research Institute at the University of Massachusetts, Léonce Ndikumana and James K. Boyce use the best available data and methodology to uncover staggering levels of unrecorded capital outflows from the region. Estimating capital flight between 1970 and 2010 from Algeria, Egypt, Morocco and Tunisia, they find that the four countries together experienced a hemorrhage of more than $450 billion (in constant 2010 dollars). The largest outflow was from Algeria ($267 billion), followed by Morocco ($88 billion), Egypt ($60 billion), and Tunisia ($39 billion).

If one assumes that this capital flight earned (or could have earned) a modest rate of return equal to the short-term United States Treasury bill rate, the compounded loss stands at $619 billion over the four decades, a sum that far exceeds the four countries’ total external liabilities of $87 billion. In this sense, rather than being indebted to the rest of the world, these countries are ‘net creditors’ to the rest of the world to the tune of more than $500 billion. They would be debt-free if they could recoup only a fraction of their assets that were illicitly transferred abroad.

Capital flight from these countries also exceeds the cumulative official development aid they received over the same period, which amounted to a combined $207 billion. This suggests that these countries would not need aid if they were able to keep their resources onshore.
Capital flight carries high costs for the people of North Africa in forgone domestic investment, lower tax revenues, and reduced spending on public infrastructure, health and education. These adverse effects are further aggravated by continued payments of debt service on loans that fueled capital flight. The Tunisian government’s call for an audit of debts inherited from the Ben Ali regime could shed light on this important issue to the benefit of the country and its legitimate creditors.

 Download “Capital Flight from North African Countries”  or view it at

About PERI

The Political Economy Research Institute (PERI) is an economic policy research organization closely affiliated with the University of Massachusetts, Amherst. PERI conducts academic research that is directly engaged with crucial economic policy issues, and that has a strong commitment to egalitarian values. PERI aims, as the late Robert Heilbroner once wrote, to use economics as “the means by which we strive to make a workable science out of morality.” PERI has a few broad, and intersecting, areas of specialty: macroeconomics, financial markets and globalization; labor markets (especially low-wage work, both in the U.S. and globally); economic development (with a particular focus on Africa); the economics of peace; and environmental economics.

CONTACT: Léonce Ndikumana, 413.545.1340 /


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