Is capital flight related to currency speculation?
GE: It could be. For example, if a country has capital controls which limit the amount of foreign exchange that can be bought by domestic citizens, and those citizens are worried that there might be a devaluation of the domestic currency, then they might try to send money outside the country to buy foreign assets, and then, if and when the domestic currency does go down in value, they can bring the foreign exchange back in, buy domestic assets on the cheap, and make a killing. In fact, this has happened in a number of recent financial crises in developing countries, and has greatly enriched financial elites who have done this type of maneuver involving capital flight. How does the issue of capital flight differ in the developing versus the developed world? GE: In most developed countries, these days, at least, there are very few if any controls over inflows and outflows of capital. So wealthy people can take money in and out of the country any time they like as long as they are not bre
