Kearney: Investors recalibrate as geopolitics and industrial policy reshape global FDI landscape

Global investors are becoming more selective and strategically driven in their foreign direct investment (FDI) decisions, according to the 2026 edition of the Kearney Foreign Direct Investment Confidence Index, which highlights the growing influence of technology, industrial policy and geopolitical fragmentation on capital flows.

The annual index, based on a survey of more than 500 senior executives at major multinational companies, ranks the markets most likely to attract FDI over the next three years. This year’s findings point to a global investment environment increasingly shaped by resilience and strategic positioning rather than pure market expansion.

The United States retained its long-standing position as the world’s top-ranked destination for FDI, followed by Canada and Japan. China climbed to fourth place, while Asia accounted for the largest share of ranked economies for the first time in more than a decade, reflecting the region’s growing strategic and technological importance.

A key theme running through the report is the rising importance of industrial policy. According to Kearney, 84% of investors now consider industrial policy either “extremely” or “very” important in shaping investment decisions. Technology and innovation capabilities emerged as the single most influential factor affecting attractiveness.

The findings suggest that governments are playing a more active role in shaping investment ecosystems, particularly in sectors such as semiconductors, AI, energy transition technologies and advanced manufacturing. Investors are increasingly favouring markets that combine policy clarity, infrastructure and innovation capacity with geopolitical stability.

The report also reflects a broader shift towards regionalisation and strategic diversification. While executives remain broadly positive about the long-term value of FDI, many are recalibrating supply chains and market exposure in response to geopolitical tensions and regulatory fragmentation.

Emerging markets continue to gain prominence, particularly those benefiting from nearshoring and industrial repositioning trends. Mexico recorded one of the sharpest rises in the rankings, supported by manufacturing and supply chain diversification dynamics.

At the same time, the report indicates a growing “flight to quality”, with investors prioritising markets offering institutional reliability, technological capability and long-term strategic relevance.

“Investors continue to believe in the value of foreign direct investment, but they are readjusting their decision-making in a more turbulent operating environment,” said Erik Peterson, partner and managing director of Kearney’s Global Business Policy Council.