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It is important to note that understanding capital mobility as a concept can enhance the comprehension of economic forces driving the development of nations. Capital mobility is a movement of capital between geographically different locations, such as countries. Many elements of international operations are influenced by the given metric. Business valuation can be impacted by capital mobility as well, which is why emerging markets need to facilitate greater mobility.
The current international market is extensively globalized, and many previously-isolated markets are now integrated into the worldwide system of exchange. It depends on the overall ease “for physical assets and finance to move across geographical boundaries” (Pettinger, 2017, para. 1). Therefore, the metric has a significant value in both the economics and social sciences. Industrialized countries, such as the United States, tend to have higher capital mobility, where it is easy for money or physical capital to flow inside the nation’s economy. It reduces the dependence on domestic economic capabilities and provides greater safety in international markets. Emerging markets tend to have less capital mobility because it is more difficult to move the capital to these regions (Pettinger, 2017). Thus, international operations make decisions considering the mobility factor, where the goal is to improve the metric in developing nations to lower the gap among countries. In addition, businesses require investments, which can come from international investors.
In conclusion, capital mobility refers to the movement of capital across nations, and higher capital mobility can be observed in developed nations. Therefore, increasing mobility allows developing economies to become better at utilizing international funds and resources. In the case of businesses, the metric provides larger access to capital leading to a higher valuation. International policies should strive to bring equality among different economies by helping emerging ones with their capital immobility issues.
Reference
Pettinger, T. (2017). Capital mobility and immobility. Economics Help. Web.
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