Net outflow of capital from countries

Investment of foreign private capital in a developing country is purchased by payments from income, which results in an effective outflow of capital from the developing to the developed countries.

No estimates of the outflow of financial resources from developing countries are available on a comprehensive basis, but it has been estimated that in the late 1980s there was a net flow of funds from South to North of over $50 billion per year. In Latin America, foreign investors transferred one third of the profits within the first 5 years, between one half and two thirds in the second 5 years, and thereafter continue taking about 90%, converting the investment into a drain on, instead of contributing to, the monetary reserves of the country. Between 1982 and 1987, the imbalance was $190 billion outflow to $40 billion of external financing.

1. International economic injustice
2. Instability of the world economy
3. Imbalance of payments

1. Speculative flight of capital
2. Reverse flow of financial aid
3. Burden of servicing foreign public debt

1. Underdevelopment of countries
2. Socially unsustainable development
3. Natural environment degradation
4. Lack of national funds to cope with problems
5. Insufficient financial resources
6. Economic underdevelopment
7. Deterioration in external financial position of countries

1. Unethical commercial practices
2. Polarization of trade between industrialized and developing countries
3. Over-dependency on international financial institutions
4. National public debt
5. Manipulation of transfer prices by transnational corporations
6. Inappropriate industrialization in developing countries
7. Inappropriate foreign investment
8. Imbalance in economic relationships among countries
9. Faltering structural adjustment in the world economy
10. Exploitative agribusiness
11. Destabilizing financial action of transnational enterprises

1. Foreign exchange restrictions

1. Unchecked community spending
2. Global economic stagnation
3. Dispersion of local capital resources
4. Decline in foreign direct investment

1. Using export proceeds for indigenous development
2. Sending remittances
3. Repatriating profits
4. Investing internationally
5. Exposing negative net transfer of financial resources from countries

1. Foreign
2. Negativity
3. Excess
4. Nonrepatriation