Capital movement theory describes international capital movement as any transfer of capital between countries, in the form of physical capital or financial capital, with the goal of obtaining extra profit through interest, dividends, shares, or rental profits from corporations abroad. International capital movement plays an important role in the economic development of many countries by providing outlets for savings, helping to finance underdeveloped countries, easing balance of payments problems, and contributing to more stable economic growth patterns through smoothing of business cycles. One of the most significant economic developments of the 1990s was the surge in international capital flows resulting from greater financial liberalization and technological improvements.
