Okuzeka
Economics vocabulary · Trade and Exchange Rates

Capital flows

Meaning in economics, with examples

nounCommon term

In economics, capital flows means: Movements of money between countries for investment, such as buying shares, bonds, companies or property abroad, or lending to foreign borrowers.

In Turkish: sermaye akımları, sermaye hareketleri

How it is used

Capital inflows come into a country and capital outflows leave it. Long-term flows include FDI, while short-term portfolio flows can reverse quickly. Emerging markets fear a sudden stop, when inflows dry up all at once. These flows appear in the financial account of the balance of payments.

Example sentences

  1. Higher US interest rates can reverse capital flows to emerging markets.

  2. Capital flows into the bond market surged after the rate hike.

Common collocations

  • capital inflows
  • capital outflows
  • portfolio flows
  • sudden stop
  • capital controls
  • foreign direct investmentInvestment by a company from one country that gives it a lasting interest and control in a business in another country, such as building a factory.
  • hot moneyShort-term investment that moves quickly between countries to chase higher interest rates or quick gains, and can leave just as fast.
  • balance of paymentsA record of all money flows between a country and the rest of the world over a period, divided into the current account and the capital and financial account.
  • emerging marketA middle-income economy that is growing and industrialising quickly and opening up to foreign trade and investment, such as Brazil, India or Türkiye.
  • exchange rateThe price of one currency expressed in another, for example how many Turkish lira you need to buy one US dollar or one euro.

More terms: Trade and Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.