According to the United Nations Conference on Trade and Development (Unctad), foreign direct investment (FDI) was one of the main casualties of the global slowdown last year.

Among developing countries, again Africa found itself last in line. Although the overall investment in the continent's 34 states classed as least developed countries rose $600m to $4.2bn, the lion's share went to just three of them: oil-rich Angola, Sudan and Mozambique.

Despite the fall in overall investment, Unctad said the influence of transnational corporations was continuing to grow.

Foreign affiliates now account for one-tenth of world GDP and one-third of world exports, the agency's World Investment Report said.

Underlying the steady growth of the multinational was the global push towards privatisation and rapid technological change. "These driving forces are long-term in nature," it said.

Off the boil

Unctad's figures show the slide in FDI from a peak in 2000 to $753bn in 2001 was even worse than the 40% slide it predicted in January.

Cash flows into developing economies have held up well

The year produced only 113 cross-border mergers worth more than $1bn, down from 175 in 2000.

And the slide shows no signs of abating quite yet. The first seven months of 2002 produced a 40% fall in cross-border mergers and acquisitions over the same period of 2001.

The steep fall meant that developed countries actually fared worse than the average, nursing a fall of 59%.

But the US retained its overall pole position, while US companies regained the top spot as sources of investment. The European Union, on the other hand, saw its FDI flows fall 60% in 2001 thanks to the vicious slowdown.

Winners and losers

The developing world saw a 14% fall, much of which was accounted for by Argentina's collapse and the end of Brazil's privatisation process, UNctad's report said.

But as in previous years, the inflows tended to be concentrated in particular locations.

China was one beneficiary, as its FDI overtook its "special administrative region" of Hong Kong for the first time, occupying the top spot both in Asia and among developing countries with a gain of 15% to $46.8bn.

The inflow of money means that 50% of China's exports now come from foreign corporations, up from 17% a decade earlier.

But a handful of the biggest recipients of foreign money are left out of Unctad's deliberations.

Tax havens generate immense financial inflows, Inctad said, but pointed out that the flows have nothing to do with local investment.