How might foreign investment be problematic for a transitioning economy? Foreign investment can temporarily slow economic growth. It may be difficult to adjust to another nation's influence. A foreign government may seize control of the country. The transitioning economy must adopt a foreign currency.

A transitional economy is in the process of moving from a planned economic system to a free market economic system, thus foreign trade relations may become stronger and more influential in the region. In this type of situation, investment in a foreign sector or industry may hinder the transition as it may hinder the justification of influence of nations.

Martebi Martebi · Answer 2 · 2022-04-27T12:54:03+02:00

Foreign investment may be problematic for a transitioning economy as It may be difficult to adjust to another nation's influence.

What is foreign investment?

Foreign investment is known to be a form of investment where people of firms that are domestic in nature are said to invest in other foreign firms so as to gain stakes and have more expansion.

Note that Foreign investment do have issues a lot when there is transitioning economy as this is one that makes it difficult to make changes to another nation's influence.

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