"The total value of the cross border M&As in 1996 was approximately $ 275 billion, twice as in 1989. In the past 10 years, according to World Investment Report 1996, the growth of the worldwide aggregate value of cross-borders M&As has mirrored the growth of FDI flows" says the study.

With rapid globalisation of production, MNCs have hiked their financial and political significance considerably and it has helped them extract benefits from developing economies, says the research paper `Multilateralisation of Sovereignty' prepared by Cuts Centre for International Trade and Economies.

There has been a dramatic increase in annual global flow of FDI from $ 60 billion in 1985 to $ 350 billion in 1996. Out of that $ 275 billion was spent in M&As in 1996. In 1995, American firms spent $ 71 billion incross-border M&As which is about 84 per cent of the equity component of FDI outflows from that country, it said.

The takeover of Parle by soft drink giant Coca Cola has resulted in elimination of small players which resulted in a situation where there are only two competitors making colas, the study said.

"This study paper was made in response to the `proposed draft' of the multilateral agreement on investment (MAI), an investment agreement being negotiated among 26 developed countries belonging to Organisation for Economic Cooperation and Devlopment (OECD)", says Pradeep Mehta of Cuts.

"OECD draft on MAI has been widely criticised in developing countries as it tries to serve the interest of big TNCs at the cost of development", Raghav Narsalay, policy analyst in Cuts and co-author of the study told PTI.

The whole purpose of the study paper was to create an internationally agreeable framework which would help in formulating domestic policy in relation to investment and development, says Mehta.

Thechairman of the World Trade Organisation's working group on investment and Thailand ambassador to WTO Krik Krai Jirapet, while commenting on the paper has said "it will go a long way in creating an internationally agreeable framework in investment".

In 1996, 10 largest host developing economies accounted for nearly 68 per cent of the total inflows of developing countries.

The study also reveals that infrastructure sector attracts only around three to five per cent of total FDI inflows.