Tag: Capital Flows

Capital flows refer to the movement of money in and out of countries. Capital typically flows from countries where there is an abundance of capital available to those where there is a need for capital to finance business activity, economic growth, and investment opportunities. Capital inflows into emerging markets can provide the much-needed investment capital needed for economic growth, as well as access to new products and technologies that enable these markets to develop. On the other hand, capital outflows are associated with decreased economic growth, a decrease in foreign direct investments, and a fall in the domestic currency. As a result, governments and central banks must monitor capital flows to ensure that economic stability is maintained.