Abstract

The objective of this study is to investigate the conceptual differences between "capital flight" and "money laundering" by concentrating on the theories that are pertinent to each of these processes. Both the Capital flight and the Money Laundering pose a substantial risk to economies that are still in the process of developing because they have the ability to bring about a reduction in economic activity, lead to a depreciation of the currency, and prevent economic expansion. This paper makes a contribution to the existing body of knowledge by expanding on the role that capital flight and money laundering play in assessing the performance of developing economies. More specifically, the paper calculates the volume of these two phenomena for developing economies and investigates the impact that they have on the economic performance. In order to shed light on the relationship that exists between capital flight and money laundering, the political economy theory of globalization is applied in the research. This is done so that the connection may be better understood. One of the "dark sides" of globalization is the practice of money laundering, which is by far the most common form of improper use of the international monetary system. According to the findings of this study, money laundering has a detrimental effect on the economy of a country by contributing to the growth of the shadow economy and criminal activities, as well as capital flight has become an increasing worry for policymakers in developing nations and because capital flight implies a loss of resources that could be used to support economic growth and development.