Last month China's Geely settled commercial terms to buy the Sweden-based Volvo division from Ford of the US. If this deal receives government approval, it will become the latest in a series of acquisitions reshaping the global automobile industry. Over the past year, Beijing Automotive (BAIC) has bought platforms and technologies from General Motors' Saab unit, Sichuan Tengzhong has proposed a purchase of the GM Hummer division and Ford has sold Jaguar and Land Rover to Tata of India.

Taken together, these transactions demonstrate two significant facts about international investment that carry two cautionary lessons for leaders in business and government. The first fact is the rise of foreign direct investment from developing into developed countries. For generations, FDI flowed overwhelmingly between rich countries. But recent years have seen surging FDI outflows from multinationals based in developing countries. FDI arising from the four "Bric" nations (Brazil, Russia, India and China), Indonesia and South Africa averaged about $10bn a year in the decade to 2003 but had climbed to $121bn by 2008.

Two forces are driving this secular rise. One is sustained, rapid economic growth in developing countries. This has fostered new world-class companies that are now expanding abroad to serve larger and richer markets. The other force is the continuing pattern of global imbalances. Several developed countries remain in chronic current-account deficit, most notably the US. Offsetting current-account-surplus countries now include several developing countries such as China and oil exporters. Some of the asset purchases of these new surplus countries are taking the form of FDI.