-Political instability – Many members of the ruling elite unsure about their fate should their regimes be overthrown – thus transfer wealth to more stable countries.
– Lower rate of return in home country
– Higher taxation of companies and individuals
– Artificially high local currency value encourages capital flight as those involved realize much higher values of hard currencies on exchange.
– Poor infrastructure
– Due to high levels of corruption among the ruling elite – they want to keep their wealth out of reach of their local fellow citizens would raise questions on how wealth was created
– High inflation rate
– Legal framework e.g fiscal policies
Why have African economies been characterized by much capital flight in the past?
