Capital outflow is aneconomic term describingcapital flowing out of (or leaving) a particular economy. Outflowing capital can be caused by any number of economic or political reasons but can often originate from instability in either sphere.

Regardless of cause, capital outflowing is generally perceived as undesirable and many countries create laws to restrict the movement of capital out of the nations' borders (calledcapital controls). While this can aid in temporary growth, it often causes more economic problems than it helps.

1. Massive capital outflow is usually a sign of a greater problem, not the problem itself.
2. Countries with outflow restrictions can find it harder to attract capital inflows because firms know if an opportunity goes sour they won't be able to recover much of their investment.
3. Governments that institute capital controls inevitably send a signal to their citizens that something might be wrong with the economy, even if the laws are merely a precautionary measure.

Argentina experienced rampant and sudden capital outflows in the 1990s after itscurrency underwent dramatic pressure to adjust in light of thefixed exchange rate, leading to arecession. Modern macro-economists often cite the country as a classic example of the difficulties of developing fledgling economies.

• Capital account
• Capital flight
• Criticisms of globalization
• Human capital flight

• Blustein, Paul.And the Money Kept Rolling In (And Out)

• International macroeconomics
• Capital (economics)

• Articles with short description
• Short description matches Wikidata