Capital Outflow

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DEFINITION of 'Capital Outflow'

The movement of assets out of a country. Capital outflow is considered undesirable and results from political or economic instability. It occurs when foreign and domestic investors sell off their assets in a particular country because they no longer perceive it as a safe investment. The capital is withdrawn from the country (flows out) and may end up in another country or back in the investor's home country.

INVESTOPEDIA EXPLAINS 'Capital Outflow'

Some countries implement capital controls to curb capital outflows. These controls are not really a solution because they can scare off investors who want control over their assets and can give the impression that something is wrong with the country's economy or government that is not yet widely known.

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