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Inbound Capital Flow

Definition

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.

Analogy

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.

Related terms

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.