Capital flight refers to the fact that many DVCs must use their export earnings to pay interest on their outstanding external debts.

Capital Flight

The transfer of savings from developing countries to industrially advanced countries to avoid government expropriation, taxation, or higher rates of inflation, or simply to realize greater returns on financial investments.

Export Earnings

The revenue a country or business receives from selling goods and services to other countries.

External Debts

These are funds borrowed by one country from foreign lenders, including private banks, governments or international financial institutions.