#USA #Washington #Kearney #Foreign Direct Investment #FDI Confidence

Kearney's 2026 FDI Confidence Index Highlights Changes in Investment Strategies

The recently released 2026 Foreign Direct Investment Confidence Index (FDICI) from Kearney's Global Business Policy Council investigates how investors are adjusting their strategies in an increasingly complex global landscape. This year’s survey, conducted with over 500 senior executives from major corporations globally, showcases the emerging significance of geopolitical considerations and industrial policies in shaping investment decisions.

In January 2026, the survey found a remarkable 88 percent of respondents intending to increase foreign direct investment within the next three years, reflecting a solid belief in the long-term growth opportunities present in various markets. Yet, this optimism comes with a nuanced skepticism; the ongoing geopolitical tensions, particularly recent escalations in the Middle East, pose substantial challenges that could disrupt or redirect investment flows. As stated by Erik R. Peterson, managing director of Kearney's Global Business Policy Council, there is a clear recalibration among investors regarding where and how they allocate their resources amidst such turmoil.

Technological Innovation Takes Center Stage

For the first time, technological and innovation capabilities emerged as the most critical factors influencing investment locations, overtaking traditional metrics such as regulatory efficiency. Indeed, 10 of the 25 markets in the Index list technological advancements as paramount reasons for attracting foreign investment. Countries boasting robust innovation ecosystems are positioned to draw in significant capital, especially in fields like artificial intelligence and digital infrastructure.

For the 14th consecutive year, the United States remains the premier destination for foreign direct investment, primarily due to its technological leadership and resilient economy. However, while it retains its top position, investor sentiment demonstrated a noticeable decline; optimism regarding the U.S. economic outlook dropped 17 points from the previous year. Meanwhile, Canada holds the second spot for the fourth year, recognized for its resource wealth and stable economy, both critical to investor confidence.

This year's Index also witnesses Asia overtaking traditional investment strongholds, with Japan ranking third due to its appealing innovation policies, and China coming fourth thanks to its vast domestic market and technological growth. Such developments indicate a shifting perspective among investors, who now prioritize regions that combine technological prowess with economic stability and geopolitical significance.

Emerging Markets on the Rise

Emerging markets are becoming increasingly interconnected with global investment patterns. For the third year running, China, the UAE, and Saudi Arabia lead the Emerging Markets Index, while countries like Thailand and Malaysia reveal substantial improvements in their rankings, driven by ongoing supply chain diversification needs. The results indicate a slight uptick in optimism towards emerging markets, particularly for Thailand and the UAE, suggesting that many companies are ready to broaden their horizons to include these strategically positioned economies.

Impact of Geopolitical Risks and Industrial Policies

Despite the persistent investment motivations, executives remain vigilant regarding rising geopolitical risks. The survey revealed that geopolitical tensions form the most significant anticipated concern, with 36 percent of respondents noting it as a critical factor for the upcoming year, followed closely by potential commodity price hikes and political fluctuations in developed nations.

Moreover, the study revealed that 84 percent of investors believe industrial policy plays a vital role in investment direction. They are increasingly inclined to consider how national policies impact potential earnings, with many recognizing that infrastructure investments and tax incentives stand out among the most effective tools for achieving favorable business environments.

Terry Toland, principle at Kearney’s Global Business Policy Council, emphasized that industrial policy is reshaping investment dynamics. Investors are now tasked with evaluating the interplay between newly offered subsidies and the complexities arising from competing policies across different markets.

Conclusion

The 2026 Kearney FDI Confidence Index delivers critical insights into the shifting landscape of foreign direct investment, marking a pivotal movement towards prioritizing technological advancements and awareness of geopolitical factors. As executives fine-tune their investment strategies, the focus will likely fall on identifying the right balance between opportunities presented by industrial policies and the associated risks they invoke. Understanding these trends will be paramount for investors seeking success in the ever-evolving global market.

For more in-depth analysis and to explore past editions of the FDI Confidence Index, please visit Kearney's official website.