Inbound capital flow refers to the movement of financial resources from foreign countries into a domestic economy. It includes investments, loans, and purchases of assets made by foreign individuals or entities in the domestic market.
Imagine your friend from another country sending you money as a gift. This is similar to inbound capital flow, where money flows into your country's economy from abroad.
Outbound Capital Flow: Outbound capital flow is the opposite of inbound capital flow. It refers to the movement of financial resources from a domestic economy to foreign countries.
Foreign Direct Investment (FDI): FDI is a type of inbound capital flow that involves long-term investments made by foreign companies in domestic businesses or infrastructure.
Portfolio Investment: Portfolio investment is another form of inbound capital flow where foreign investors buy stocks, bonds, or other securities in domestic companies without actively participating in their management.
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