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Capital mobility


The extent to which capital can be shifted between different uses and, in particular, between different countries. This is restricted in various ways. Capital in use may be entirely sunk, or it may be possible to withdraw it from its present use only gradually, as existing equipment wears out. Capital mobility is hindered by asymmetric information: investors do not have sufficient information, or sufficient confidence that such information as they have is reliable, about opportunities in different industries or foreign countries. International capital mobility is frequently limited by government controls, in both capital-importing and capital-exporting countries. See also perfect capital mobility.


Reference: Oxford Press Dictonary of Economics, 5th edt.