Capital Flight from Russia

IMF Policy Discussion Papers, June 1, 2000

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Capital Flight from Russia

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Bibliographic details

• Authors: Prakash Loungani, Paolo Mauro
• Published: June 1, 2000
• Series: IMF Policy Discussion Papers
• DOI: https://doi.org/10.5089/9781451972115.003

Summary and central argument

• This paper documents the scale of capital flight from Russia, compares it with that observed in other countries, and reviews policy options.
• The evidence from other countries suggests that capital flight can be reversed once reforms take hold.
• The paper argues that capital flight from Russia can only be curbed through a medium-term reform strategy aimed at:
  • improving governance and macroeconomic performance, and
  • strengthening the banking system.
• Capital controls result in costly distortions and should gradually be phased out as part of that medium-term strategy.

Findings and evidence

• Capital flight from Russia is quantified and compared with other countries (detailed estimates are contained in the paper).
• Cross-country evidence indicates reversibility of capital flight following reforms.
• Channels and determinants of capital flight examined include:
  • export proceeds and channels of capital flight from Russia,
  • actions by institutional investors and hot money flows,
  • roles of commercial banks and financial institutions,
  • corruption, crime, and institutional weaknesses during transition.

Policy recommendations

• Implement a medium-term reform strategy focused on:
  • improving governance,
  • improving macroeconomic performance,
  • strengthening the banking system.
• Gradually phase out capital controls to avoid the costly distortions they create.

Subjects and keywords (as listed)

• Subjects: Balance of payments, Capital controls, Capital outflows, Commercial banks, Corruption, Crime, Exports, Financial institutions, International trade
• Keywords: Baltics; capital; capital control; Capital controls; capital flight; capital flight from Mexico; capital flight yield; Capital outflows; channels of capital flight from Russia; Commercial banks; concept of capital flight; control; Corruption; costs of capital capital flight; determinants of capital flight; Europe; export proceeds; Exports; extent capital flight; hot money; institutional investor; PDP; root causes of capital flight; Russia; transition; yearly capital flight

Content in this bundle

• Capital Flight from Russia - PDP/00/06
  • Capital Flight from Russia - PDP/00/06 (Markdown version)
  • Capital Flight from Russia - PDP/00/06 (PDF)