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Simple English definitions for legal terms
capital flight
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A quick definition of capital flight:
Capital flight refers to the movement of a lot of money that people have invested out of a country. This usually happens when there is a lot of political unrest or a very bad economic situation. It's like people are scared and want to take their money somewhere else where they think it will be safer.
A more thorough explanation:
Capital flight refers to the movement of a significant amount of investment money out of a country. This usually happens when there is political instability or a severe economic downturn, causing investors to panic and withdraw their funds.
For example, during the 1997 Asian financial crisis, many investors withdrew their money from countries like Thailand, Indonesia, and South Korea, causing a massive capital flight. Similarly, in Venezuela, the ongoing political and economic crisis has led to a significant capital flight as investors fear for the safety of their investments.
Capital flight can have severe consequences for a country's economy, as it can lead to a shortage of investment capital, a decrease in the value of the country's currency, and a rise in interest rates.