"Investors are optimistic about prospects for a global economic recovery led by the developing world," said the World Bank report.

Following a 40 percent plunge in FDI last year as the global economy struggled to emerge from the international financial crisis, the rebound in investment flows was being spurred by the fast-growing developing countries, said the report.

The "World Investment and Political Risk" report, based on a survey by the bank's Multilateral Investment Guarantee Agency (MIGA), said investors from the oil, gas and mining industries, as well as those based in developing countries, "are particularly bullish in their investment intentions".

"This upsurge in FDI into developing countries is welcome news, especially considering last year's drop," said Izumi Kobayashi, MIGA executive vice-president.

"FDI flows directed to productive assets can spur economic growth and reduce poverty," Kobayashi added.

The multilateral lender's political risk insurance arm said foreign investment in emerging economies would reach some $416 billion dollars, increasing by a further 20 percent in 2011 and 13 percent in 2012. But these investment flows remain well below 2008's pre-crisis peak of about $587 billion.

The survey of 194 multinational investors showed the BRIC countries -- Brazil, Russia, India and China -- accounting for roughly half of such investment while the poorest countries received only three percent of the overall total.

The World Bank is also hoping to grow the amount of foreign direct investment in conflict-affected countries, who currently receive roughly 10 percent of the overall foreign investment in emerging economies.

"Only a handful of countries absorb most of that investment," said World Bank Managing Director Ngozi Okonjo-Iweala. "In 2009, at most $35 billion of the $354 billion in foreign direct investment reached the countries that needed it the most."

Foreign direct investment from developing countries to the rest of the world also rebounded briskly to an estimated $185 billion in 2010, said the MIGA report.

Political risk was the top worry of multinational executives when operating in developing countries over the next three years, the report said, adding that about a fifth of the investors surveyed use insurance to mitigate this risk. Other concerns were market size, lack of finance and quality of infrastructure.

In conflict-affected and fragile economies, investors were mainly concerned about adverse government intervention rather than overt political violence. "They worried about changes in regulations, expropriations and currency restrictions, among other issues," the report said.

"By providing much-needed financial resources, technology transfer, managerial expertise and connections to the global economy, FDI can help generate and sustain economic growth and promote development, both essential to stability," noted the report.

Established in 1988, the MIGA was a member of the World Bank Group to promote FDI into developing countries to support economic growth, reduce poverty and improve people's lives.