What is the meaning of “capital flight” in economics?

Capital flight refers to the large-scale movement of financial assets or capital out of a country due to factors like political instability, economic mismanagement, or unfavorable changes in government policy. When investors fear that their investments may be at risk or that they will face higher taxes or expropriation, they may move their capital abroad to more stable and attractive markets. Capital flight can undermine a country’s economy by reducing the domestic availability of capital for investment and by weakening the currency. It often leads to a loss of investor confidence and can create further economic instability, especially in developing countries.