Global business leaders are showing resilience in their approach to foreign direct investment even as geopolitical tensions rise and governments expand industrial policies. According to the latest survey from Kearney’s Global Business Policy Council, 88 percent of executives plan to increase their foreign direct investment over the next three years.
The findings come from the 2026 Foreign Direct Investment Confidence Index, released on April 10. The annual report draws on responses from more than 500 senior executives at large corporations worldwide. It ranks the markets seen as most attractive for FDI in the coming three years.
The United States holds the top spot for the 14th year in a row. Executives continue to value its technological leadership and economic strength. Yet optimism about the US economic outlook over the next three years dropped notably, with net sentiment falling 17 points from the previous survey.
Canada stays in second place for the fourth consecutive year and appears to be narrowing the gap with the United States. Respondents point to its natural resources, stable economy, and growing technology sector as major draws.
Asia stands out with strong momentum this year. Japan moves up to third place, boosted by its strengths in innovation and targeted incentives. China rises to fourth, supported by the size of its domestic market and advances in technology development.
For the first time in more than a decade, Asia accounts for the largest share of markets on the overall index. This shift highlights how investors are paying closer attention to locations that offer a mix of technological edge, growth potential, and strategic positioning.
Several middle-power economies also improved their standing. Singapore and South Korea climbed in the rankings, reflecting interest in their innovation capabilities and roles in global supply chains.
On the emerging markets side, China, the United Arab Emirates, and Saudi Arabia remain the top three for the third year in a row. Thailand and Malaysia recorded some of the biggest gains, driven by ongoing efforts to diversify supply chains away from heavy reliance on any single location. A number of emerging economies, including Brazil, Mexico, and India, also appear on the broader global list, showing greater overlap between developed and developing destinations.
Technological and innovation capabilities have become the leading factor guiding investment choices this year. This element now ranks ahead of traditional concerns such as regulatory efficiency or overall domestic economic performance. Executives mentioned technology as a key or tied reason for investing in 10 of the 25 markets featured on the index.
The survey was conducted in January 2026, before recent escalations in Middle East conflicts added further uncertainty. Still, the results point to a clear recalibration in strategy rather than any retreat from international investment.
“Investors still believe in the value of FDI, but they are recalibrating how they make their decisions in a more turbulent operating environment,” said Erik R. Peterson, partner and managing director of Kearney’s Global Business Policy Council and co-author of the report. “Capital continues to flow, but companies are becoming more selective about where they invest as they weigh technological capabilities, geopolitical risks, and the growing influence of industrial policy.”
Industrial policy now plays a major role in shaping decisions. Eighty-four percent of those surveyed described it as extremely or very important when choosing investment locations. Fifty-seven percent see it as having a positive effect on their business. At the same time, nearly nine in 10 report at least moderate risks from competing policies across different countries.
Infrastructure development and tax incentives rank as the most effective tools within industrial policy packages. Enthusiasm for tariffs and export controls is much lower.
“Industrial policy is reshaping the global investment landscape and fast becoming a key factor in FDI decision-making,” added Terry Toland, principal at Kearney’s Global Business Policy Council and co-author of the report. “Investors are weighing the opportunities created by subsidies and other policy incentives with the complexity of competing industrial policies across markets.”
Geopolitical tensions top the list of expected developments in the coming year, cited by 36 percent of respondents. This is followed by rising commodity prices and political instability in developed markets.
Despite these headwinds, the overall message from the index is one of continued engagement with global opportunities. Companies appear willing to accept higher risks when markets demonstrate strong innovation ecosystems and long-term potential.
The Kearney FDI Confidence Index is based on a proprietary survey of 507 executives from companies with annual revenues of at least $500 million. It measures the likelihood of making direct investments in specific markets over the next three years, with scores calculated only from foreign-headquartered respondents to avoid home-country bias.
As governments continue to introduce new incentives and restrictions to build domestic industries, the 2026 results suggest that successful destinations will need to combine policy support with genuine strengths in technology and resilience. Investors are not walking away from the global economy. They are simply becoming more deliberate in where they place their capital.
This recalibration could influence capital flows for years to come, particularly as technological competition intensifies and supply chains evolve in response to both risks and opportunities.
