Brazil, the United Arab Emirates and Russia ranked among the top 10, the findings of the latest FDI Confidence index, a regular survey of global executives conducted by management consulting firm, A T Kearney, revealed.
South Africa and other Gulf States (Bahrain, Kuwait, Oman and Qatar) made their debut for this year's index while Vietnam, Malaysia and Indonesia returned to the Index's top 25 favourite destination, the study revealed.
The index provides a look at the present and future prospects for international investment flows. Companies participating in the survey account for more than $3.8 trillion in global revenues.
The assessment of senior executives at the world's largest companies found corporate investors optimistic about the prospects for developing nations and increasingly targeting them for more corporate investments in years ahead.
Emerging markets have also registered the strongest investor optimism, with India, China, Brazil, the United Arab Emirates and Vietnam experiencing the most positive change in investment and outlook during the last year.
Among developed countries, the US was again placed third overall in the 2007 index. Europe's economic recovery helped Germany and UK maintain their top ten rankings and Australia was ranked 11 and France, Canada and Japan placed in 13 to 15 positions respectively.
Troubles in credit markets are not dampening corporate plans for new FDI, top executives said during the survey. "The world's economic centre of power continues its perceptible shift from developed to developing markets," says Paul A Laudicinia, chairman of A T Kearney.
"While global FDI recovers further from its 2003 lows, the increasingly transnational behaviour of corporations is reflected in their investment preferences. Developed countries are competing with developing countries for investment capital and developing countries are increasingly winning out."
Despite the shift in investment expectations, global executives remain concerned over the role US plays in the health of world's economy. Global executives cited the slowing US economy, volatility of the US dollar, rising interest rates, increased government regulation and the volatility of energy prices as the top concerns facing the world economy.
On the rise of the middle east as FDI destination, the survey revealed that corporate investors saw access to the wealthy regional market as a top opportunity for investment followed by availability of services in industry hubs like Dubai. A fast growing population, access to capital and energy reserves were among the top attractions of the region.
On China and India as top FDI destinations, Vivek Gupta, MD of AT Kearney India said "both developed and developing countries will continue to cite India and China as their most preferred destination for first-time investments. India will continue to attract investors in the high value-added services industries, particularly financial services and IT."
While China and India remain top destinations, developing country investors are more bullish about new markets such as Vietnam, Brazil and South Africa while developed market investors tend to stick to familiar market, said Janet Pau, manager of the FDI Confidence Index.