Capital outflow

Capital outflow,

Definition of Capital outflow:

  1. Excessive capital outflows from a nation indicate that political or economic problems exist beyond the flight of the assets themselves. Some governments place restrictions on capital outflow, but the implications of tightening restrictions is often an indicator of instability that can exacerbate the state of the host economy. Capital outflow exerts pressure on macroeconomic dimensions within a nation and discouraging both foreign and domestic investment. Reasons for capital flight include political unrest, introduction of restrictive market policies, threats to property ownership and low domestic interest rates.

  2. Increase in the amount of money available from internal or local sources for the purchase of external or foreign capital assets such buildings, land, machines.

  3. Capital outflow is the movement of assets out of a country. Capital outflow is considered undesirable as it is often the result of political or economic instability. The flight of assets occurs when foreign and domestic investors sell off their holdings in a particular country because of perceived weakness in the nation's economy and the belief that better opportunities exist abroad.

Meaning of Capital outflow & Capital outflow Definition