Understanding Capital Flight: Causes, Consequences, and Global Implications

Introduction

Capital flight refers to the rapid outflow of financial assets and investments from one country to another, often driven by economic instability, political unrest, or unfavorable government policies. This phenomenon has significant implications for both the originating and recipient countries. The purpose of this report is to explore the causes of capital flight, its consequences on national economies, and its broader global implications. By analyzing the underlying factors contributing to capital flight and examining its effects on economic stability, investment, and growth, we can gain a deeper understanding of this critical financial issue.

Causes of Capital Flight

The drivers of capital flight are multifaceted, often arising from a combination of economic, political, and social factors. Economic instability is a primary catalyst; when investors perceive a threat to their assets, they are likely to relocate their capital to safer environments. For instance, hi