ABSTRACT
In this chapter, the authors explore the magnitude and impact of capital flight from Ethiopia on growth and poverty reduction for the period 1970 to 2012. One of the fundamental problems that African economies are still facing is that they have not been able to sustain high growth rates for a sufficiently long time to generate meaningful gains in poverty reduction. Despite the huge problem of capital flight from Ethiopia, it was surprising to find that there have scarcely been any country-specific studies concerning the impact of capital flight on economic growth and poverty reduction in the country. According to official statistics, Ethiopia continued to register double-digit economic growth. Economic performance in Ethiopia is highly correlated with conflict and the political process that accompanies it. Hence, such a political process has an adverse effect not only on growth and poverty reduction efforts, but it also serves as a triggering factor for future potential violent conflicts in the country.
