capital flight

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Capital flight

The transfer of capital abroad in response to fears of political risk.

Capital Flight

A situation in which foreign investors remove their investments from a particular country because of some increase in country risk. Capital flight may occur because of government instability, the sudden appearance of high inflation, or because another country's government offers a better deal. Governments almost always try to prevent capital flight from occurring, but this is not always possible. See also: Foreign direct investment.

capital flight

The shifting of funds out of a country to avoid confiscation, controls, or depreciation. Capital flight results in further deterioration of a currency's exchange rate.