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Capital Flows

In a nutshell, capital flows refer to the movement of money and financial assets across national borders. This includes things like foreign direct investment (FDI), portfolio investment (buying and selling of stocks and bonds), and lending and borrowing between countries.

Capital flows play an important role in the global economy because they help countries fund investment and growth. For example, if a company from one country invests in another country, it can bring in new capital, technology, and jobs to the host country.

On the flip side, large capital outflows from a country can be a sign of weak economic conditions and can lead to instability in exchange rates and financial markets. Overall, capital flows are a key indicator of the health and interconnectedness of the global economy.

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