India ranks second in world's favoured FDI destination lagging just behind China which is number one, according to a study released by global strategic management consultancy A T Kearney.
The emerging markets have registered the strongest investor optimism, with India, China, Brazil, UAE and Vietnam experiencing the most positive change in investment outlook during the last year, the study, based on a survey of top executives, says.
While China and India remain uncontested as the leading FDI destinations in the 2007 index, 15 of the most attractive FDI destinations are developing markets.
The index provides an overview of the prospects for international investment flows. Among developed countries, the US again placed third overall in the Index. Europe's economic recovery evidently helped Germany and the UK maintain their top 10 rankings. Australia ranked 11th and France, Canada and Japan placed 13th, 14th and 15th, respectively.
"The world's economic center of power continues its perceptible shift from developed to developing markets," said Paul A Laudicina, managing officer and chairman of AT 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," the study says.
Despite the shift in investment expectations, global executives remain concerned over the role the US plays in the health of the world's economy, the study finds.