Capital outflow is an economic term describing capital flowing out of (or leaving) a particular economy. Outflowing capital can be caused by any number of economic or political reasons but can often originate from instability in either sphere. Economics (deriving from the Greek words οίκω [okos], house, and νέμω [nemo], rules hence household management) is the social science that studies the allocation of scarce resources to satisfy unlimited wants. ... In politics, a capital (also called capital city or political capital — although the latter phrase has an alternative meaning based on an alternative meaning of capital) is the principal city or town associated with its government. ...

Regardless of cause, outflowing capital is generally percieved as always undesirable and many countries create laws to restrict the movement of capital out of the nations' borders (called capital controls). While this can aid in temporary growth, it often causes more economic problems than it helps.

1. Massive capital outflow is usually a sign of a greater problem, not the problem itself.
2. Countries with outflow restrictions can find it harder to attract capital inflows because firms know if an opportunity goes sour they won't be able to recover much more of their investment.
3. Governments that institute capital controls inevitably send a signal to its citizens that might be something wrong with the economy, even if the laws are merely a precautionary measure.

Argentina experienced rampant and sudden capital outflows in the 1990s after its currency underwent dramatic pressure to adjust in light of the fixed exchange rate, leading to a recession. Modern macro-economists often cite the country as a classic example of the difficulties of developing fledgling economies. The 1990s decade refers to the years from 1990 to 1999, inclusive. ... A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currencys value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold. ... A recession is usually defined in macroeconomics as a fall of a countrys real Gross Domestic Product in two or more successive quarters of a year. ...

Sources

Blustein, Paul. And the Money Kept Rolling In (And Out)