Which one of the following statements about capital flight is correct?
A. Capital flight refers to the tendency of developing countries to overinvest in commercial aircraft.
B. Capital flight refers to developing countries' citizens accumulating or investing their savings in the industrially advanced
countries.
C. Capital flight refers to the high international mobility of speculative funds caused by variations in exchange rates.
D. Capital flight refers to the tendency of large corporations of industrially advanced countries to build new plants in the
developing countries because labor is cheaper.
My answer is B
I agree with you.
To find the correct answer about capital flight, let's analyze each option:
A. This statement refers to overinvestment in commercial aircraft by developing countries, which is not related to capital flight. Therefore, this option is incorrect.
B. This statement suggests that capital flight refers to developing countries' citizens accumulating or investing their savings in industrially advanced countries. This definition accurately describes capital flight, as it refers to the movement of financial assets or investments out of a country. Therefore, option B is correct.
C. This statement describes the international mobility of speculative funds caused by variations in exchange rates. While capital flight can be influenced by exchange rate fluctuations, this option does not fully capture the concept of capital flight. Thus, option C is incorrect.
D. This statement refers to large corporations from industrially advanced countries building new plants in developing countries due to cheaper labor. Although this scenario involves investment, it does not align with the definition of capital flight, which specifically refers to the movement of funds or assets out of a country. Hence, option D is incorrect.
Therefore, based on the explanations provided, the correct statement about capital flight is option B, which states that capital flight refers to developing countries' citizens accumulating or investing their savings in industrially advanced countries.