Problem Set 9: Foreign Direct Investment and Immigration1.What is the difference between foreign direct investment (FDI) and a financial portfolioinvestment?2.Explain the concept of transfer pricing. Give two examples of how a firm would prefer to price afinal good produced and sold in one country and a key input used to produce that final goodthat is manufactured in another country, when corporate tax rates differ in the two countries.3.What are the advantages of foreign direct investment for a multinational companyheadquartered in the United States?4.What are the disadvantages of foreign direct investment for a multinational companyheadquartered in the United States?5.When FDI occurs in a developing country, which groups in that country are likely to gain andwhich groups are likely to lose? Will the country, as a whole, be likely to obtain net economic
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