Perfect capital mobility refers to a theoretical concept in economics where capital can move freely and without restriction between different countries and regions in response to market signals and economic conditions. In a world with perfect capital mobility, capital flows would be driven purely by market forces and investors would have no obstacles or impediments to their investment decisions. In reality, there are many constraints on capital mobility, such as government regulations, currency controls, and tax policies that can affect the flow of capital across borders. Nevertheless, the concept of perfect capital mobility remains an important ideal for economists, as it represents a world where resources are allocated most efficiently and where market forces can drive growth and prosperity.

Perfect capital mobility refers to a theoretical economic condition where financial capital can move freely and instantaneously across countries without any restrictions, such as taxes, transaction costs, or government-imposed capital controls. In this ideal scenario, investors seek the highest returns globally, equalizing interest rates across nations because any differences would be immediately arbitraged away.

Under perfect capital mobility, savings in one country can fund investments in another, enhancing global resource allocation. It assumes no barriers to trade in assets, perfect information, and no currency exchange risk. This concept is central to open-economy macroeconomics and models like the Mundell-Fleming framework, which examines the interplay between exchange rates, monetary policy, and capital flows. In reality, perfect capital mobility rarely exists due to practical constraints and regulatory barriers.