The region has reported a 25.5 per cent increase in FDI during the past 12 months. According to the report, the huge liquidity in the Gulf and strong oil prices helped attract more foreign direct investment to the region.

In the Middle East, the report said, Turkey, and the oil rich Gulf countries, attracted the greatest volume of investment. “Even if the oil price is to drop, it will never return to the historic lows it hit some years ago. The region has an excess of liquidity from oil revenues, a fact that generates great investor interest, not only in the oil sector, but also in others,” said Nicole Moussa, an analyst with the Unctad.

Explaining the survey results pertaining to the Gulf, the report said the surge in FDI in the region is not just about the oil sector, foreign investors want a share of the booming domestic market of these countries. 

“In the Gulf, the service sector is attracting the greatest volume of investment. Of course, this is linked to the oil boom,” said Moussa.

The Unctad report said it is not just the FDI flow into the region that is rising, on the other hand, there has been a significant growth in capital exports from Gulf countries such as the United Arab Emirates and Kuwait.

This, according to Unctad, is due to the large number of mergers and acquisitions that are being made by state-owned companies from the region.

According to the Unctad survey, the global investment flow increased 34 per cent last year to $1.2 trillion. This was the third successive year there was growth in global FDI. The FDI growth reflects the good economic climate and the strong growth registered in different parts of the world.

The survey said some factors such as the increase in corporate profits resulted in share price appreciation and growth in the value of mergers and international acquisitions which, in turn, contributed to the strong growth in global FDI volumes. This year, the United States topped the list of FDI recipients with $ 177.3 billion, an increase of 78 per cent compared to last year. Overall, the investment flow to developed countries grew 47.7 per cent and reached $800.7 billion in 2006. In terms of different categories of the economies, the flow grew more to transition economies, represented by the countries of south-western Europe and of the Community of Independent States (CIS). The FDI inflow into these nations reached $62 billion, up 56 per cent from the previous year.

Latin America and the Caribbean together attracted $99 billion, representing a decline of  4.5 per cent. In Brazil, however, investment rose 6 per cent to $16 billion. In Africa, Egypt and Morocco are among the top recipients of foreign investment, with flows of $5.3 billion and $ 2.3 billion respectively.

The estimates show, however, that there has been a decline in FDI in these countries. While Egupt's FDI share dropped by 1.9 per cent, for Morocco, it fell 20.9 per cent last year .

The increase in the investment flow to Africa in general was caused by high oil prices and a great foreign demand for commodities, especially oil. This is evident in the case of Nigeria which received $5.4 billion in FDI, up 60 per cent from 2005.

FDI inflows to South, East, Southeast Asia and Oceania, rose 13 per cent over 2005 to reach a high of $187 billion in 2006, the report said.

China, Hong Kong and Singapore were the three largest recipients of FDI while India surpassed South Korea to become fourth largest recipient of FDI in the region,

According to the Unctad, natural resources and related industries played a fundamental part in investment over the last two or three years. Despite the strong growth in global FDI and cross border fund flows, Unctad has warned of a global slowdown in FDI from next year.