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I may sound stupid to ask this question but pardon me for that. What's the different between Outflow of capital and Flight of capital? I googled about both terms but couldn't find how they differ from each other.

Edit : Let me quote the definitions from investopedia.

Capital outflow is the movement of assets out of a country. Capital outflow is considered undesirable and results from political or economic instability.

Capital Flight is a large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, currency devaluation or the imposition of capital controls.

From these two definitions what I can conclude is that Capital flight is a large scale capital outflow means these two are same things, the difference is just of the scale.Am I correct or is there any other difference ?

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  • $\begingroup$ Hi. Welcome to Economics.SE! This has received some close votes. I think the question could be improved if you included more details about what you think the definitions of each are and why you think they are the same or different. Thanks! Hope you get an answer. $\endgroup$ – jmbejara May 28 '17 at 4:40
  • $\begingroup$ @jmbejara Thankyou so much . I have edited the question, hope someone answers it now. $\endgroup$ – user212388 May 28 '17 at 10:56
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This is actually pretty tricky, as "capital flight" can be a contested term itself. Here's a distinction provided by Darryl McLeod in the Concise Encyclopedia of Economics, edited by David Henderson and provided online by the Library of Economics and Liberty:

There is no widely accepted definition of capital flight. The classic use of the term is to describe widespread currency speculation, especially when it leads to cross-border movements of private funds that are large enough to affect national financial markets. The distinction between "flight" and normal capital outflows is thus a matter of degree, much like the difference between a "bank run" and normal withdrawals.

There's some discussion by Frank R. Gunter in the International Encyclopedia of the Social Sciences, edited by William Darity, Jr., about the fuzziness of the term "capital flight" as related to motivations or the nature of the transactions:

Capital flight is generally defined as an outflow of funds from a country motivated by an adverse change in the country’s economic, political, or social environment. Some believe that this definition is too broad. They distinguish between outflows that reflect “normal” international diversification motivated by marginal changes in risk-adjusted returns and funds fleeing or propelled across national borders during a crisis. According to this view, only the latter category represents true capital flight. Related definitions restrict capital flight to short-term speculative outflows—“hot” money—or to an outflow of illegal transactions only.

So, it seems that scale, motivations (adverse events, crisis), and the nature of the transactions could all be distinctions to some degree between capital outflow and capital flight.

I hope this helps!

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