IT IS an accepted fact that Ukraine suffers from a high level of “capital flight”. The term refers to a process by which people pull money out of a country and buy foreign assets instead. Ukraine is highly corrupt. If you make money in Ukraine, you often want to get it out of there, lest someone else steal it from you. Ukrainian oligarchs are big fans of London property, where their capital is safe.
So we suspect there is capital flight from Ukraine, but how much? The problem is that the term “capital flight” has a variety of definitions. This means that there are no easy-to-find statistics on capital flight for most countries.
Therefore, we have tried to estimate capital flight for Ukraine. The details should not concern the casual reader, but we have used the methodology shown in this paper.
Ukraine, it turns out, has pretty much always had a high level of capital flight since the end of Soviet times: billions of dollars a year, in fact. This is bad news for what is by some measures Europe’s poorest country. To put this in perspective, we’re looking at roughly 10% of GDP in the 1990s and 2000s. That’s an incredibly high level of wealth, vanishing from the country each year.
(Interestingly enough, the last few years have actually seen relatively low capital flight. This is probably to do with the capital controls implemented by the central bank following the Russian invasion, and also possibly weird valuations of assets linked to the collapse in Ukraine’s currency.)