Chapter 19.3, Problem 1R

To determine

To state the importance of bureaucracies and capital flight.

Explanation of Solution

The significance is explained as under:

Bureaucracies: It is a major part of any government. For the purpose of expert guidance & knowledge in working the administration & for the quality life of the civil services, they play a major role. Bureaucracies handle all the paperwork of the governmental operations such as issuing permits, licensing facilities, etc & they lead the smooth working of the economies.

Capital flight: It is important as it is the assets & capital transferred from the nation due to several reasons such as instability in the economy or currency devaluation which does not result in tax penalties. Moreover, this helps in gaining from such transfers by buying gold or foreign currencies overnight.