Paradox of international capital flows

The fact that investment-seeking capital tends to flow from poor countries to rich ones rather than vice versa. – The reason for this empirical finding is that, although investors could mathematically earn a higher profit in capital-poor economies, they have less confidence in the infrastructure, such as, above all, a poorly educated and poorly healthy labor force, corruption, a fragile legal system, political instability, restrictions on capital movements or the risk of expropriation. – See flight money, money home, money, moral, haven, safe, institution, capital movements, international, capital market opening, capital protection, Lucas paradox.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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