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Econ: What is Outflow of Capital? 2 Views
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Description:
What is Outflow of Capital? Outflow of capital happens when people move their money out of a country because of undesirable economic conditions. Investors believe that their money would be safer and experience better opportunities if it were invested or held in another country.
Transcript
- 00:00
And finance Allah shmoop What is the outflow of capital
- 00:07
All right well you are a stunningly deep sleeper One
- 00:10
day you fall asleep on the beach just before the
- 00:12
tide comes in When you wake up covered in you
- 00:15
know seaweed and surrounded by a flopping fish You find
Full Transcript
- 00:18
that everything you brought to the beach was washed out
- 00:21
to the sea Your towel's your beach umbrella You're cooler
- 00:24
with the mango juice and the cops you know made
- 00:27
out of coconuts And your wallet Yeah that thing with
- 00:29
that stack of cash you brought for vacation Well capital
- 00:33
outflow in a nutshell Well in a coconut shell anyway
- 00:36
Riel life capital outflow refers to the same concept but
- 00:40
only on a national level That is assets move out
- 00:44
of the country They flow out Investors pull their money
- 00:47
out of one place because they think their cash will
- 00:50
be better off somewhere else You're an investor in a
- 00:52
Su Mak farm in the small Mediterranean nation of Slovenia
- 00:56
The king dies and his dopey son takes over the
- 00:59
throne So yeah you're sure the new king's policies will
- 01:03
ruin the country's economy and run everything businesswise into the
- 01:06
ground So you closed down your Su Mak farm and
- 01:09
you buy another one in a neighbouring country with a
- 01:12
more stable future in a way smarter Qing Capital Outflow
- 01:16
out of Slovenia and into its neighbour That's what's happening
- 01:20
Well Capital outflow doesn't just involve foreigners moving money from
- 01:24
one overseas investment to another Citizens of a country might
- 01:27
move assets out of that nation if they think they'LL
- 01:30
be safer somewhere else So let's go to China It's
- 01:32
a country with a restrictive government and not a huge
- 01:35
respect for the rule of law for its individuals Like
- 01:39
if you're a rich person in China well you'LL want
- 01:41
to get as much of your money out is you
- 01:43
can most likely anyway move it somewhere else somewhere safer
- 01:47
somewhere less scrutinizing So you take what cash you can
- 01:50
and you look for investments elsewhere outside of the restrictive
- 01:53
rules of China So you buy an apartment in Paris
- 01:57
and maybe a small castle with little golf course in
- 01:59
Scotland and then you come back around and buy a
- 02:02
cotton candy factory with corn in Iowa Or maybe you
- 02:05
start looking at ASU Mac Farm along the Mediterranean Yeah 00:02:09.365 --> [endTime] just not inched Slovenia
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