COMMERCIAL ILLICIT OUTFLOWS AND MACROECONOMIC STABILITY: EMPIRICAL EVIDENCE ON TRADE MISPRICING AND CAPITAL FLIGHT IN NIGERIA
Abstract
Illicit Financial Flows (IFFs) via commercial channels remain a severe structural impediment to
economic sustainability in resource-dependent emerging markets. This study evaluates the impact of
commercial illicit financial outflows specifically trade mispricing and corporate tax avoidance on the
economic growth of Nigeria. Anchored on the Race to the Bottom theoretical framework, the research
examines how cross-border capital leakage undermines domestic resource mobilization, exacerbates
inflationary pressures, and destabilizes foreign exchange reserves. Utilizing a quantitative survey
research design, primary data were gathered from a sample of 63 senior financial administrators and
regulatory compliance officers at the Ministry of Finance, Abuja. Inferential statistical evaluation via
Ordinary Least Squares (OLS) regression demonstrates a statistically significant negative impact of
illegal commercial outflows on economic growth (R = 0.830, R^2 = 0.936, F(1, 62) = 328.315, p <
0.001). The empirical findings confirm that commercial trade mispricing accounts for over 93% of the
variance in macroeconomic volatility and revenue erosion. The paper advocates for mandatory automatic
exchange of tax information (AEOI), advanced customs AI-driven trade verification systems, and strict
enforcement of thin capitalization rules.
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Published in JOURNAL OF ACCOUNTING, FINANCE & MANAGEMENT DISCOVERY WUKARI
ISSN: 2714-2574
This article appears in our peer-reviewed academic journal
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