A term that refers to an event where investors pull capital out of an economy on a large scale by selling the financial assets that they own.
Capital flight occurs when investors lose confidence in an economy for various reasons, and wish to protect the value of their investment.
In a world of freely moving capital, the sudden exit of capital can act as a force of discipline on bad economic policies by starving the economy of precious investment capital.
Capital flight can also be irrational, which provides opportunities for other investors to buy assets being sold rapidly at bargain prices.
