UNCTAD latest Study has revealed that the developing countries overtook their traditionally wealthier counterparts in attracting foreign direct investment for the first time last year, as industrialized nations suffered 18 per cent plunge in FDI inflows.

UNCTAD’s Global Investment Trend Monitor showed that in the preceding year global foreign direct investments was $1.3 trillion, down from $1.6 trillion in 2011 and developing countries reaped $680 billion of that, or 52 per cent of the total.

For the first time in history, developing countries have attracted more investment than developed countries. The shift was largely prompted by evaporating investments in crisis-hit developed economies like the United States, European nations and Japan, which accounted for 90 per cent of the $300 billion-decline in global FDI last year. The global investment figures which showed an upward trend in 2010-2011, fell in 2011-12 to a historic low of $1.2 trillion which came during the worst of the global financial crisis in 2009 amid growing US market uncertainty.

The US, which remains the world’s largest recipient of foreign direct investment, saw its FDI inflows slip more than 35 per cent to $147 billion, while Germany saw its net investment level plunge from $40 billion in 2011 to just $1.3 billion last year, mainly due to large divestments there.

Developing countries also suffered from the global decline but the decline was much more moderate. Asia, which raked in 59 per cent of all FDI to developing countries, saw its inflows dip 9.5 per cent, with China, the world’s second-largest recipient of such investments, registering a 3.4-per cent drop in 2012 to $120 billion. South America and Africa meanwhile registered positive growth in FDI flows last year.

UNCTAD expects FDI flows to rise to just $1.4 trillion this year and to $1.6 trillion in 2014 still far below the 2007 pre-crisis level of some $2.0 trillion in investments.