Capital flow is the movement of money for the purpose of investment, trade or business production. This occurs within corporations in the form of investment capital and capital spending on operations as well as research and development.
What is meant by capital flow?
What Are Capital Flows? Capital flows refer to the movement of money for the purpose of investment, trade, or business operations. Inside of a firm, these include the flow of funds in the form of investment capital, capital spending on operations, and research and development (R&D).
What is an example of capital flow?
As a simplified example, if the Federal Reserve Board raised its target interest rate relative to foreign interest rates, capital would flow into the United States.
What is a capital inflow in business?
variable noun. In economics, capital inflow is the amount of capital coming into a country, for example in the form of foreign investment. [business]
Why capital flow is important?
Capital flows can help countries to grow and to share risks. But economies with large external debts can be vulnerable to financial crises and deep recessions when capital flows out.