Investors Increasingly Influenced by Industrial Policy and Technology Prowess, Amid ...

Why It Matters

The findings signal a re‑calibration of global capital flows toward jurisdictions with strong innovation ecosystems and supportive policy frameworks, reshaping competitive dynamics for multinational corporations.

Key Takeaways

• 88% of firms plan to increase FDI over next three years
• 84% say industrial policy heavily influences investment location decisions
• Technological capability now tops factors guiding FDI, ahead of regulation
• US stays top FDI destination for 14th year; optimism down 17 points
• Asia and middle‑power economies rise as investors chase innovation hubs

Pulse Analysis

Investors are increasingly weighing national industrial policies alongside traditional risk metrics, a shift highlighted by Kearney’s latest confidence index. The survey reveals that 84% of respondents consider industrial policy a critical determinant of where to allocate capital, while nearly nine in ten flag moderate risk from competing policy regimes. This heightened policy sensitivity reflects a broader strategic pivot: firms are seeking environments that not only mitigate geopolitical exposure but also offer clear, government‑backed incentives such as infrastructure spending and tax breaks.

Technology leadership has become the premier magnet for foreign direct investment, eclipsing regulatory efficiency and domestic economic performance. Markets that demonstrate robust AI development, digital infrastructure, and data‑driven ecosystems are now viewed as the safest long‑term bets. The United States, for the fourteenth consecutive year, remains the top destination, yet investor optimism has softened by 17 points, suggesting that even established hubs must continuously innovate to retain capital. Meanwhile, Canada, Japan, and China are climbing the rankings as they blend scale with advancing innovation capabilities.

Regional dynamics underscore a diversification of capital toward Asia and emerging middle‑power economies. Singapore, South Korea, and Thailand are attracting attention for their strategic supply‑chain positions and proactive industrial policies. The rise of these markets signals a broader rebalancing, where multinational corporations spread risk and tap into new growth corridors beyond traditional Western hubs. For investors, the message is clear: future FDI success will hinge on aligning with jurisdictions that couple cutting‑edge technology ecosystems with transparent, supportive policy frameworks.