Does Natural Resource Abundance Cause Capital Flight?

Abstract: This paper finds a link between resource curse and capital flight research by finding support for an empirically unexplored but implied relationship between natural resources and capital flight. In empirically testing this relationship it concludes that natural resource endowments tend to presage capital flight. The paper uses previously defined models of rent-seeking behavior in resource abundant economies to explain the observed effects. The relationship is economically and statistically significant, and persists even when control variables for rule of law, democracy, and economic development are added.