• how might foreign investment be problematic for a transitioning economy

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  • ? Foreign investment can be problematic for a transitioning economy in several ways. First, sudden and large inflows of foreign investment can lead to a rapid appreciation in the local currency, making it difficult for local firms to export their goods and services, leading to slower economic growth. At the same time, if foreign investors are allowed to buy up large chunks of the economy, this can lead to the loss of local control over key industries, which can have a detrimental effect on local entrepreneurship and self-sufficiency. Finally, because foreign investors often don't have the same attachment to the local culture or environment, they may be more likely to exploit resources in a manner that is not socially or environmentally responsible.

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      Tara Herman

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