Capital flight is the enemy of any developing country's economic progress. It means the removal of wealth -- legally or otherwise -- from the country in which its owner lives, to other and safer places. Measuring this outflow is difficult. But the current issue of World Financial Markets, a monthly publication of the Morgan Guaranty Trust Company, provides a highly interesting estimate of the extent to which capital flight has contributed to the developing countries' debts.

Over the past decade, the bank's economists calculate, the debts of 18 countries in Latin America, Asia and Africa increased by $451 billion. Of that, $198 billion represented capital flight. The authors note the many statistical distortions that can affect these figures. They point out that they are using a very broad definition of flight. But if these figures are not entirely precise, the general order of magnitude seems quite reliable.

Patterns vary greatly from one country to another. Argentina's foreign debt is now $50 billion. Without capital flight, the authors calculate, its debt would instead be perhaps $1 billion. The country borrowed to allow wealthy Argentines to change their pesos into dollars and pounds sterling, and over the years the size of those borrowings has been swollen by the interest charges.

Brazil is quite different. Of its huge debt, now about $106 billion, only $14 billion represents capital flight. Most of Brazil's loans have been invested in Brazil, which helps explain why Brazil is having less trouble than some of its neighbors. But Mexico's debt, currently around $97 billion, would be only $12 billion without the past decade's capital flight. Nearly all of South Africa's $24 billion foreign debt is similarly the result of capital flight.

The removal of these billions from developing economies has deprived them of investment that they need to keep growing. As the Morgan Guaranty authors point out, any policy to manage these countries' debts will have to deal with this phenomenon. There is not much point in making new loans to indebted Latin countries if, instead of building productive enterprises in Latin America, it is merely socked into private accounts in Miami and New York.

Reversing this outflow is the healthiest and most direct way to alleviate the debts of these countries. Every dollar that goes home is a dollar off that country's foreign debt. There have been recent signs of repatriation in several Latin countries, including Argentina. But it is private money, and coaxing it home has become one of the great challenges for these governments. Success depends not only on economic policy but particularly on political atmosphere. That's why the promise of stability, and an open door to international investment, are now crucial in reducing the debts.