Kearney 2026 FDI Confidence Index: Investors Recalibrate Amid Geopolitical Tension

Global Investors Recalibrate: Kearney’s 2026 FDI Confidence Index Highlights Shift Toward Asia and Innovation

Global business leaders are fundamentally changing how they approach international investment. According to the 2026 Foreign Direct Investment (FDI) Confidence Index (FDICI) released by Kearney’s Global Business Policy Council, investors are recalibrating their strategies to navigate a landscape defined by intensifying geopolitical tensions and the expansion of industrial policies.

Despite a turbulent operating environment, the appetite for global expansion remains strong. A survey of more than 500 senior executives conducted in January 2026 reveals that 88 percent of respondents plan to increase their foreign direct investment over the next three years. This suggests a sustained belief in long-term global opportunities, even as the criteria for selecting investment destinations shift.

Innovation Overtakes Regulation as Top Priority

For the first time, technological and innovation capabilities have emerged as the most critical factors influencing where companies allocate their capital. This marks a significant pivot from previous years, where traditional metrics like regulatory efficiency were the primary drivers of investment decisions.

This shift indicates that corporations are now prioritizing markets that can offer cutting-edge tech ecosystems and innovation hubs over those that simply offer the most streamlined bureaucracy. In an era of accelerating technological competition, the ability to access and integrate new technologies is now the decisive factor for global investors.

The Critical Influence of Industrial Policy

Industrial policy—the strategic effort by governments to support specific sectors of the economy—has moved from the periphery to the center of investment strategy. The 2026 Index finds that 84 percent of investors now cite industrial policy as “extremely or highly important” when making investment decisions.

As nations increasingly use policy to shape their domestic industries and secure supply chains, corporations are adjusting their footprints to align with these government mandates. This trend highlights a move toward a more fragmented global economy where state-led strategic goals heavily influence corporate capital allocation.

Asia’s Decade of Dominance

The 2026 Index marks a historic milestone for the Asian region. For the first time in more than a decade, Asia holds the largest share of ranked markets on the main Index. This ascent reflects a broader trend of investors seeking growth in Southeast Asian countries and other emerging markets in the region.

Experts from Kearney, including Shirley Santoso and Igor Hulak, have noted that the opportunities and challenges shaping FDI in Southeast Asia are now central to the global investment conversation, contributing to the region’s increased attractiveness to foreign capital.

Geopolitical Risks and the Middle East

While optimism remains high, it is tempered by significant geopolitical uncertainty. Erik R. Peterson, managing director of Kearney’s Global Business Policy Council, notes that investors are recalibrating their decisions to manage a more volatile environment.

Specifically, the recent escalation of conflict in the Middle East has added a layer of risk that could disrupt, delay, or redirect FDI flows. These tensions serve as a reminder that while the desire to invest is present, the “where” and “how” of that investment are increasingly dictated by risk assessment and shifting political allegiances.

Looking Ahead: A Fragmented Investment Landscape

The 2026 FDI Confidence Index serves as a barometer for a world in transition. The move toward industrial policy and the prioritization of tech capabilities suggest that the era of purely market-driven FDI is evolving into one of strategic, policy-aligned investment.

As companies continue to navigate a fragmented global economy, the ability to balance the pursuit of innovation with the realities of geopolitical risk will define the winners of the next three years. The sustained commitment to international investment shows that while the roadmap has changed, the drive for global growth remains intact.