Capital Flight and Unemployment Rate in Nigeria

Abstract

This study examined Capital Flight and unemployment rate in Nigeria. Capital flight was proxied by foreign direct investment abroad, external debt servicing, external reserves and capital and financial account deficits. Based on study objectives, relevant literatures were reviewed and evaluated. Relevant data were extracted from the annual Statistical Bulletin of the Central Bank of Nigeria and the National Bureau of Statistics. Unit root test was conducted using Augmented Dickey Fuller method which revealed that the variables were integrated at level and first difference necessitating the use of autoregressive distributive lag/bond test to explore the long run relationship existing among the variables in the model and the result showed that the variables in the model were co-integrated thus we proceeded in evaluating the long run as well as the co-integrating form in the model. From the result of the various tests, it was revealed capital flight did not actually increase unemployment rate in Nigeria within the periods studied by the researchers. Based on the findings from the analysis, the study recommended amongst others, that external debt acquired should be judiciously used for infrastructural development that would encourage investments which would ultimately bring about economic growth as well as enhance human development in Nigeria.