Flight of capital

Capital flight refers to an event where investors pull capital out of an economy on a large-scale by selling the financial assets that they own. It occurs when investors lose confidence in an economy for various reasons such as political or economic instability, currency devaluation or the imposition of capital controls and wish to protect the value of their investment. A capital flight in term of human resources also occurs when skilled people do not get jobs and they start moving abroad.

This phenomenon can impose a severe burden on developing countries since the lack of capital impedes economic growth and may lead to lower living standards. If the government wants to win the confidence of investors, it should learn about the factors that are pushing these investors away. In the same manner, to retain skilled people in the country, the authorities should create environment opportunities for people.

Faryal Zafar

Karachi