Capital strike

Capital strike refers to the withholding of new investment in an economy. A capital strike can occur when banks decide to raise lending standards or minimum loan requirements to individuals and business entities, and decide to sit on cash reserves, rather than take many loan risks, until a later point in time. A capital strike can occur when governments pursue policies that investors consider "unfriendly" or "inflexible." A capital strike can refer to a single investor or a large group such as those who refused to invest in the United States in 1937. A capital strike was the premise of the popular novel Atlas Shrugged by Ayn Rand.

In response, governments sometimes act to appease investors; however, governments committed to endogenous development (recently, in Latin America) occasionally refuse to capitulate and instead pursue economic development plans which utilize other resources.

External links

• Employers Threaten Walkout Chosun Ilbo February 9, 2006