Capital ﬂight from DVCs (developing countries) tends to offset much of the foreign loans and aid
that they receive from IACs (industrially advanced countries).

Question

Quizplus · Accepted Answer

Capital flight refers to the outflow of financial assets from a country, which can happen due to various reasons such as political instability, economic uncertainty, or low returns on investment opportunities. When developing countries receive foreign loans and aid from industrially advanced countries (IACs), some portion of this money may be lost due to capital flight, as investors in the developing country may choose to send their money abroad instead of investing it locally. Therefore, the statement is true.

Capital ﬂIght from DVCs (Developing Countries) Tends to Offset Much