Capital flight is primarily driven by economic and political instability within a country. When investors perceive a high level of risk associated with investing in a country, they may choose to move their capital to safer destinations.

Capital flight can lead to a balance of payments deficit, as the outflow of capital exceeds the inflow. This can put pressure on a country's currency and make it more difficult to import goods and services.

Capital flight can destabilize a country's financial system by reducing the availability of credit, increasing interest rates, and making it more difficult for banks to operate. This can lead to a financial crisis.

Governments can impose capital controls to limit the outflow of capital from the country. This can help to stabilize the financial system and prevent a balance of payments crisis.

Capital flight refers to the sudden and large-scale movement of capital out of a country, typically due to economic or political instability.

High inflation can erode the value of savings and investments, making it more attractive for investors to move their capital to countries with lower inflation rates.

Capital flight can slow down economic growth by reducing investment and making it more difficult for businesses to obtain financing.

Capital flight can lead to currency depreciation, as the demand for foreign currency increases relative to the demand for the domestic currency.

Capital inflow refers to the movement of capital into a country, typically due to attractive investment opportunities or economic stability.

Capital flight worsens a country's balance of payments by reducing the inflow of capital and increasing the outflow of capital.

Governments can create a stable political environment to encourage capital inflows by reducing uncertainty and making the country more attractive to investors.

Net capital flows refer to the difference between a country's capital inflows and capital outflows.

High interest rates can attract capital inflows, but they can also lead to capital flight if investors perceive that the high interest rates are unsustainable or if they expect the currency to depreciate.

Capital flight can destabilize a country's financial system by reducing the availability of credit, increasing interest rates, and making it more difficult for banks to operate. This can lead to a financial crisis.

Governments can impose capital controls to limit the outflow of capital from the country. This can help to stabilize the financial system and prevent a balance of payments crisis.