Evaluating the Relationship between Capital Flight and Total Investment in Chosen Countries of MENA Zone

Capital flight is a term which refers to unregistered domestic capital flows that include a broad variety of activities ranging from the legal and economically beneficial to those that are illegal and harmful to the economy. Researchers concern the most about capital flight which implicitly implies to illegal movements of capital from one country to another. In this paper، we will evaluate the effects of capital flight on total investment. We use data from 2005 until 2011 of chosen countries of MENA zone. Estimation methods are IRLS and GMM. In order to regard bias in estimation، IRLS method is used. In GMM method، growth rate is considered as endogenous variable. Results of both methods indicate that there is a negative relationship between capital flight and total investment. So that if capital flight increase for 1 percent، total investment would decrease for 0. 07 percent.