Determining the Impact of Capital Flight on Economic Growth and Financial Stability in Palestine


 The influence of capital flight on economic growth and financial stability in Palestine was examined in this study (2000-2020). To analyse the research data, the researchers used time-series data on capital flight, foreign currency reserves, foreign debt, and real GDP, as well as ordinary least squares estimation techniques. We employed the Johansen co-integration and error correction technique. The findings show that the research variables have a co-integration connection, and capital flight has impacted the Palestinian case’s economic growth. The report recommends that the government develop a favourable investment climate to stimulate investment and avoid capital flight from Palestine, based on the findings. Furthermore, the Palestinian government should restrict capital flight because these infrastructure projects/programs will cut the country’s production costs. The government should create a favourable investment environment for foreign capital and encourage entrepreneurs and equity investors to put their money into the domestic market. Furthermore, the government should send all foreign aid monies to relevant locations in order to enhance economic growth and generate work chances for the unemployed, hence increasing the country’s overall growth rate.

Author(s) Details:

Nemer Badwan,
Palestine Economic Policy Research Institute (MAS), Jerusalem, P.O. Box 19111, P.O. Box Ramallah 2426, State of Palestine.

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