Investment into developed economies, 2001

US: $144bn UK: $55bn Netherlands: $30bn France: $29bn Germany: $21bn Data: Jan to Sept Source: Unctad

The sharpest falls were seen in developed economies, which saw their total foreign investment inflows more than halve last year to an estimated $500bn, the United Nations Conference on Trade and Development (Unctad) said.

The developing world, by contrast, suffered only a modest drop, from $240bn in 2000 to $215bn last year.

Unctad, which compiles the most closely watched statistics on foreign direct investment flows, projected that the situation would not worsen sharply in the next few years.

According to research conducted among major international companies, few big investors have substantially changed their long-term investment intentions since 11 September.

Heavy falls

The figures were published in an amendment to Unctad's annual World Investment Report, which, as it was published on 18 September, went largely unremarked in the wake of the terror attacks on the US.

Investment into developed economies, 2000

US: $288bn UK: $120bn Netherlands: $53bn France: $44bn Germany: $176bn Data: Full year Source: Unctad

The figures were based on projections from the first nine months' investment activity, most of which is accounted for by mergers and acquisitions among multinational companies.

Extrapolating from the first three quarters, most major economies have suffered a massive slump in investment, Unctad found.

The worst-hit state, in proportional terms, seems to have been Germany, but the country's 2000 figure was distorted by the effect of the massive takeover of Mannesmann by Britain's Vodafone.

The other big recipients of FDI - the US, the UK, France and the Netherlands - all look likely to have accumulated last year a little over half their 2000 totals.

China potential

While major economies have faltered, developing countries have maintained more modest investment level, the report said.

Cash flows into developing economies have held up well

Mainland China, which has long been a growth market for foreign firms, has continues to attract cash, and looks likely soon to overtake the UK as the world's second-biggest target for foreign direct investment (FDI).

Hong Kong, which earned some $64bn in FDI in 2000, was unlikely to have attracted more than half that last year, Unctad said.

Other emerging regions such as Eastern Europe have broadly maintained inward investment flows, while Africa was the only region predicted to increase its FDI share last year.

But Africa's total projected FDI, at $11bn, was just over half what Ireland alone earned in 2000.

Looking ahead

Since Unctad's figures were based almost entirely on events ahead of 11 September, statisticians conducted extra research in an effort to predict the effects of the attacks.

According to a number of surveys in October and November, Unctad now forecasts almost no change in corporate attitudes.

Half multinationals surveyed intended no change in their investment behaviour after 11 September, Unctad said, and most of the rest were undecided.

"While the 2001 decline is not likely to be recouped this year, it will ultimately be reversed once consumer confidence returns," the report said.