What is the best way to account for capital flight?

[Hasan Raza]

The relationship between the means of financing public debt and capital flight is an old subject that was not extensively studied. For the bigger part, the emphasis was on crowding out and crowding in effects. Capital flight out of a country due to fiscal and monetary policies that lead to a depreciation of the currency, or an expectation of its decline, such as public spending financed by deficits and expansion of external borrowing under a fixed exchange rate regime, or because of the exchange of currencies with low-interest rates in higher-yielding currencies, carry trade. In addition, of course, to the political situation in the country and the region in which it is located.

 

[Onachukwu]

Capital flight is generally defined as an outflow of funds from a country motivated by an adverse change in the country’s economic, political, or social environment. Some believe that this definition is too broad. They distinguish between outflows that reflect “normal” international diversification motivated by marginal changes in risk-adjusted returns and funds fleeing or propelled across national borders during a crisis.

 

[Kehinde]

The World Bank's technique calculates capital flight as the difference between capital inflows (the sum of the change in foreign debt stock and net direct investment) and the sum of the current account deficit and increases in the official reserves.

 

[Doradorwa]

The main point for consideration was the prevailing “tax laws”, in a country and also the financial system of that country; where a currency of one country can be a legal tender in another country, the investors always preferred to put their monies in such countries, as investments or just funding; because they were more concerned about the exchange risk that their investments had to meet with; and secondly the ease with which the funds can be redeemed without any loss.

 

[Alexandoy]

I wonder how you would get the data to account the capital flight from your country. It involves the economic tools that only the government economists would have. Capital flight usually occurs when the political climate is not stable that a dictator is being besieged by protests left and right. Another reason for capital flight is when the economy is struggling and some industries are dying brought about by the recession.

 

[Diamond07]

In economics, capital flight is a phenomenon characterized by large outflows of assets and/ or capital from a country due to some events. To stem or prevent capital flight, a government may impose capital controls to limit the amount of money people can take out of a country.

 

[Seun4luv]

The World Bank's technique calculates capital as the difference between capital inflows (the sum of the change in foreign debt stock and net direct investment) and the sum of the current account deficit and increases in the official reserves.

 

[Ralphjoe]

Capital flight is a problem that besiege most economics of the world that has some issues of economic instability as a result of bad policies. The thing is that there is no way that anyone can have a real number to the amount of capital flight in an economy, the government only gives an estimate not the real figure.

 

[Richard92]

You can account to for flight capital by adding it to running cost and also to working capital, every business man should always be wise and know how they account for expenses and also planning how experience are going to be managed.

 

[joy101]

The capital flight is the problem that when the political climate is not stable, will should always be wise and also know how the account for expenses and also plain on how to manage it, it is important to know the amount of flight capital in an economy.

 

[Trojan8]

Countries with huge foreign direct investments would have a lot of capital flights. The is especially true if the business environment is hostile. As they would prefer to take back their funds instead of reinvesting it. I think the government should set up rules that favor businesses and this would create confidence in businessmen.

 

[mayreeh38]

I think capital flight affects countries with foreign currencies. When these investments don't go as planned, there tends to be a withdrawal from the investors and discontinuity. Planning for expenses and unforseen circumstances will help in monitoring these investments.

 

[Olahab]

In economics, capital flight is a phenomenon characterized by large outflows of assets and/or capital from a country due to some events, resulting in negative economic consequences to that country. Additionally, the term can be referred to as the rapid withdrawal of assets and capital from certain regions or cities within a country.

 

[Sariana23]

Capital flight is the outflow of money from a country in response to some economic event that has taken place in that country. This is a consequence when the country is unable to meet its debt obligations and therefore loses its level of confidence and credibility, which is exactly what is happening in my country, including government mismanagement.

 

[Setho]

In capital flight , the major concern I'd about moving money because of the bad state of the economy or other reasons, the best and easy easy Is to solve the problem that is making people to move out and if you get it right , you will definately see a decrease.

 

[Setfragil]

Capital flight is a very critical issue that needs to be attended to, especially in my country. The rate of capital flight that goes on is much and can render the entire economy useless if something is not done as a matter of urgency.

 

[Sheyemanu]

Well in reply to your question in the above post concerning capital flights, well I have to say that I am new to this topic 'capital flights' as indeed i am hearing about it for the first time, well after this i will have to look into the subject matter

 

[Nomad]

I was not ware about the term "capital flight." But I was aware about outflow of capital from a country due to the government's bad monetary policy. Capital flight is very bad for poor economies as there will be a loss of jobs and opportunities for the public and loss of revenue for the government.

 

[tyrim88]

There are definitelly many of the reason why a country would be experiencing capital flight,when a direct foreign investment is in the deficit and the already existing bbusineses are in one way leaving,then the economy will have a downturn.