CAPITAL FLIGHT: ISSUE, ESTIMATES AND EXPLANATION EVIDENCE FROM ASEAN COUNTRIES

Abstract

The purpose of this study is to identify estimates and determinants of capital flight in 8 ASEAN countries. These are measured using the residual method. The estimated relationship between the variables that affect capital flight in this study was carried out through the approach of Fixed Effect Model with Cross-section SUR (Seemingly Unrelated Regression). The SUR method in panel data is used to overcome errors in correlated different models (autocorrelation) whose parameters are estimated using Generalized Least Square (GLS). Based on the results of testing the best model selection, namely the chow test and the hausman test, the best panel data regression estimation model that can be used for this research model is the Fixed Effect Model (FEM). The results showed that economic growth, differences in interest rates, inflation and growth in external debt had a significant positive effect on capital flight, while the exchange rate had a significant negative effect on capital flight. This research was conducted in developing countries, aimed at reducing capital outflows, exchange rate stability and economic growth.