A periodic study from consultancy A.T. Kearney finds that managers at some of the world's largest companies are taking a more cautious approach to investing in other countries due to the economy. After hitting an all-time high of $1.98 trillion in 2007, foreign direct investment worldwide fell 14% in 2008 and an estimated 39% last year, according to the U.N. Conference on Trade & Development. Unctad predicts a gradual recovery this year and next, but executives surveyed by A.T. Kearney say they are postponing some investments due to continued market uncertainty and difficulty obtaining credit.
When companies do expand or acquire overseas, where are they most likely to do it? China remains the No. 1 destination globally—a position it has held in A.T. Kearney's surveys since 2002—and the U.S. has jumped back to the No. 2 position after falling behind India in the 2007 study. A.T. Kearney Chief Executive Paul A. Laudicina characterizes this and the even more significant jumps for Germany, Canada, and Australia as a "return to fundamentals and a flight to quality."
Yet at the same time, this year's ranking shows as never before the rise of emerging markets. Three of the top five most attractive destinations for foreign investment are China, India, and Brazil, and Poland jumped 16 rungs to weigh in at No. 6. Also entering the top 25 for the first time: Romania, Saudi Arabia, Chile, and Egypt. For a complete look at the top 25 countries where executives plan to place their bets, read on.