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Econ Videos 79 videos

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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.

Language:
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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

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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