While Russia is considered sixth top FDI recipient, Saudi Arabia and India have gained eighth and ninth positions respectively in terms of foreign investments, revealed a study conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

China, which is leading as the priority host economy for FDI amongst the developing economies, is also considered the second largest FDI recipient in the world, the study added.

While the developing countries are experiencing an increase of about 17 percent and have managed to sustain uninterrupted inflow growth since 2003, the inflows into the developed countries have recorded a sharp decline of nearly 30 percent in 2008.

Globally, the FDI inflow during the past year dropped to $1.77 trillion, a decline of 37 percent over the year 2008. Despite a widespread decline in FDI inflows in 2009 across all the three major group of economies, the impact on flows to developing and transition economies was relatively lesser as compared to developed countries.

While the developing economies recorded a drop in FDI flows of nearly 32 percent in 2009 as compared to a year earlier, the developed market witnessed a fall of more than 42 percent during the same period.

“The major recipients of FDI for second quarter of 2010 shows a sharp contraction in the flows to the majority of developed countries leading to negative flows in few highly favored investment destination such as United Kingdom and Belgium,” said ASSOCHAM President Swati Piramal.

While the United Kingdom witnessed a drop of $6.96 billion in FDI, Belgium recorded a decline of $8.36 billion in foreign investment inflow in the second quarter of this year, said the report.

On the contrary, foreign investment flow to the key developing nations such as China, Russia, Brazil and India witnessed a modest gain over the first quarter, recording an increase of 35.5 percent, 30.8 percent, 15.6 percent and 16.8 percent respectively, it added.

The developing economies, according to early indications, are right on the track of outperforming and attracting more FDI than developed countries in 2010, said the ASSOCHAM report.

“The potential impact of the economic crisis, however, enforced the shifting of geographical focus to developing and transition economies because of their much better economic performance than the developed economies,” it added.

According to the report, total FDI inflow in the world soared to a record high of almost $2.1 trillion in 2007, of which developed countries received $1.44 trillion, a 68.8 percent of the total FDI inflow in the world.

In 2007, developing and transition economies received only 31.2 percent of the total inflow in the world. India alone received $8.88 billion during April-August 2010-11.

“Factors such as weaker economic growth in developed countries and abnormal functioning of the world credit are putting pressures on the pace of recovery of FDI flows,” said Piramal.

“In addition to other factors, increased screening requirements and new limitations of foreign equity policies of government during crisis is also impairing with the inflows. Even with the gradual recovery of FDI in short term, developed nations chances of attracting more FDI are fraught with mounting fiscal deficits and debt levels,” she added.