1. a) Foreign Direct Investment (FDI) is a contributor to one of the growth engines: technical change (in particular, it contributes to technical change in countries which are not at the technology frontier). Yet FDI could also be seen as contributing to another one of the growth engines, namely investment. Explain why this is the case.

1. b) Also, countries can increase current investment either by reducing current consumption or government spending, or by making a debt that will have to be paid out of future GDP. Clearly FDI does not reduce current consumption or government spending. In what sense can it be treated as a debt that will have to be paid out of future GDP?