The annual FDI volume has risen to an astonishing $450 billion, and governments are keen competitors for a slice of that pie. This year's report, however, spots a new trend about FDI.

It says that, "The rise in importance of created assets is the single most important shift among the economic determinants of FDI location in a liberalising and globalising world economy." Created assets refer not only to infrastructure created in an economy, but also the more intangible aspects, all of which ultimately boil down to knowledge.

Skills, attitudes to wealth creation, business culture, all fall within the definition of created assets which help transnationals select locations for investment.

The report also points out that merely being pro-FDI is not enough today--governments have to go ahead and take steps to eliminate "nuisance costs" like corruption andred tape.

Clearly, all this has major implications for India. In terms of skills, and so far as a business culture and business law is concerned, this country can hold its own. As RBI governor Bimal Jalan pointed out in an Assocham lecture a few days ago, the uncoupling of services from manufacturing offers new scope for India.

We have a vast pool of technically skilled people, which is the reason for our competitive advantage in software. If the lure of capitalising on those skills forces transnationals to set up shop in India, the country will reap a double advantage.

There is, however, one worry as far as Indian companies are concerned. The report points out that 90 per cent of all FDI from the US are in the form of mergers and acquisitions.