Economics

Macroeconomic consequences of prolonged capital flight on sustainable economic growth in Nigeria

Ukr. socìum, 2026, 2(97): 94-111
Language:
English
https://doi.org/10.15407/socium2026.02.094
5

This study investigates the dynamic interactions between capital flight and key macroeconomic indicators in Nigeria over the period 1990–2024. Rather than treating capital flight solely as a consequence of macroeconomic instability, the study examines its co-movement with economic growth, domestic investment, inflation, oil prices and exchange rate behaviour. Annual time-series data were analysed using the autoregressive distributed lag (ARDL) framework and error correction modelling to capture both short-run dynamics and long-run adjustment processes. The findings suggest that capital flight exhibits procyclical behaviour with respect to real GDP and domestic investment, indicating those periods of economic expansion are associated with increased externalisation of capital. Inflation appears to be associated with higher capital outflows within the estimated models, while oil prices do not exert a consistent influence. Exchange rate movements are not significantly affected by short-run changes in capital flight, but adjustment dynamics indicate some evidence of gradual interaction among the variables over time. The study concludes that capital flight in Nigeria reflects a combination of structural economic conditions and portfolio reallocation behaviour rather than purely adverse macroeconomic performance. Policy implications emphasise institutional credibility, macroeconomic consistency and investment climate reforms as critical to moderating capital outflows.

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