Definition – What is net capital outflow?
Net capital outflow measures the flow of capital in and out of an economy.
A positive net capital outflow means that the economy invest more outside of it than the rest of the world invests inside of it. A negative net capital outflow means the opposite.
Formula – How to calculate net capital outflow
Net Capital Outflow = Acquisition of foreign assets by residents – Acquisition of domestic assets by non-residents
In a country, acquisition of foreign assets by residents is $400,000 and acquisition of domestic resources by non-residents is $300,000.
Net Capital Outflow = $400,000 – $300,000 = $100,000
Therefore, net capital outflow is $100,000.
Sources and more resources
- Wikipedia – Net Capital Outflow – A description of how net capital outflow is calculated.
- Policonomics – Net Capital Outflow – Includes the formula to calculate net capital outflow.