Capital Flight, Resource Rent, and Resource Governance : Implications for Household Welfare in Africa’s Most Capital Flight-Prone Economies

This study explores the effect of capital flight (CF), natural resource income, and resource governance on household well-being in five African economies that are both resource-rich and most prone to CF, namely, Algeria, Angola, Nigeria, Morocco, and South Africa. A dataset spanning between 1980 and 2022 was employed and analyzed using the novel pooled Bewley estimator for long-term dynamic heterogeneous panels. The findings revealed that CF is linked with a long-term depletion of resources that would otherwise accelerate economic development and improve living standards. Likewise, natural resource wealth promotes poor household welfare over time. However, enhanced resource governance improves aggregate household welfare in the long run. Additionally, while increased variation in the exchange rate and financial sector development adversely impacted household well-being, human capital development was found to be enhancing in the long run.