Capital flows refer to the movement of money for investment, trade, or business operations between countries. These flows can be in the form of foreign direct investment (FDI), portfolio investment, or other financial transactions. They are influenced by factors such as interest rates, economic stability, and government policies. When capital flows into a country, it can stimulate economic growth by providing funds for businesses and infrastructure. Conversely, when capital flows out, it may indicate economic instability or lower investment opportunities. Understanding capital flows is essential for analyzing global economic trends and the health of individual economies.