Question

How might foreign investment be problematic for a transitioning economy?

Answer 1

It may be difficult to adjust to another nation’s influence. Just got it right on the quiz.

Answer 2

The foreign investment is problematic for the economy of a transitioning country because it provides profit to the foreign investors only. They use cheap labor of the developing country. Moreover, the local producers and investors are directly harmed. The major profits are going in the pockets of the other nation's investors. This also causes inflation in the country.