Overall, the foreign direct investment (FDI) story in 2026 is likely to face similar headwinds as it did in 2025. A lack of predictability, latent effects of tariffs, supply chain restructuring, and the externalities of conflict will continue to be driving forces for how foreign investment flows worldwide.
However, according to UNCTAD’s ‘Trade and Development Report 2025: On the Brink‘, the economic resilience of the past year stands on shaky ground and was largely driven by frontloading ahead of tariff deadlines and AI investments. Therefore, one phenomenon that will be closely observed is the development of the AI industry, and whether a much-discussed economic bubble will finally burst. If 2025 was the year of AI hype, 2026 might be the year we feel the consequences of unfulfilled promises.
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Below, we’ve gathered some predictions for what the Big Picture trends in FDI will look like in 2026, such as the continued downturn in global flows or the race to secure critical minerals. One through line in all of these predictions is the power of geopolitical developments to shift economic and political paradigms.
In GlobalData’s ‘Geopolitics Executive Briefing (Fifth Edition)‘, analysts note one of the biggest fundamental shifts reshaping the global economy:
“The chronic, intensifying, and still early-stage superpower rivalry between the US and China, in which economic weapons (sanctions, export controls, tariffs) are the instrument of first recourse,” the report notes.
Dr Martin Kaspar: geopolitics, talent wars, and data sovereignty will drive FDI in a more protectionist world
Vice-president of strategy and corporate development Frankische Industrial Pipes, FDI expert
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By GlobalDataProtectionism and geopolitics are changing the game in FDI. Flows will increasingly be directed towards safer locations with stable political and regulatory systems. The era of global trade, free flow of capital and open markets is probably coming to an end. It is not low-labour costs that take precedent now, but proximity to markets, security or reliability that matters (especially as labour will be replaced by automation).
The hunt for talent will intensify. Somewhat counter-intuitively (due to the above), talent acquisition will become more important rather than less. Highly educated professionals with cutting-edge skills who can push the frontiers in automation, big data analytics, and so on, will become sought after.
Data sovereignty will turn into a driver for FDI. Countries will increasingly insist on data being localised domestically. Data centres will thus have to be set up in the market itself (which might force companies such as Amazon, Google, and Facebook to be compliant with increasingly strict data protection laws and host the data in each market separately). Coupled with the exponential growth of data centres, which will be one of the areas of growth (and in particular, ancillary sectors, such as energy generation, cooling systems, etc.)
FDI might not be the only game in town anymore. With the growing unease towards foreign control / foreign capital and the emphasis on job creation, we might increasingly emphasise startups and the scaling of existing companies. Infrastructure projects will likely be financed again domestically, and even government-backed Public-Private Partnership initiatives might see a resurgence.
Conor Finnegan: expect subdued FDI and watch out for the AI bubble
Consultant, FDI Center, Location Decisions
In 2026, we expect global FDI to be shaped once again by geopolitical tensions, rising trade barriers, and supply-chain reconfiguration. These forces are contributing to a more regionalised and risk-averse investment environment as major economies intensify their use of industrial policy.
While such policies can attract sizeable inflows into selected markets (particularly the US, parts of Europe, and emerging hubs benefiting from friendshoring), the broader effect is a reallocation of investment rather than an expansion of overall flows. As a result, global FDI volumes are likely to remain subdued, with growth concentrated in a limited set of ‘winning’ locations (e.g., Mexico, Southeast Asia) and weaker inflows in regions more exposed to geopolitical risk or lacking strong policy incentives.
In response, ‘industries of the future’ will continue to dominate greenfield announcements and IPA pipelines, as investor interest remains concentrated in deep-tech and digital infrastructure (e.g., quantum technologies, biotech, semiconductors, and data centres). Likewise, the clean-energy transition will remain a major driver of cross-border investment, with renewable generation, grid modernisation, storage, hydrogen, and critical-minerals processing attracting strong attention.
A word of caution echoed by several commentators is that at the current pace, investment in AI-related infrastructure may be difficult to sustain. High CAPEX, power-constraints, and uncertainty over near-term monetisation prompt questions about whether we are witnessing an ‘AI bubble’. Recent market reactions to aggressive hyperscaler spending highlight these concerns. In any case, this is likely to be a defining story of 2026, in the FDI world and further afield.
Erika Magder: emerging markets will take centre-stage, while the critical minerals race intensifies
Executive vice-president, global sales, ResearchFDI
Looking ahead to 2026, ResearchFDI anticipates a shift in global FDI flows. Asia and Africa are expected to capture a larger share of investment, particularly in the manufacturing sector. Africa presents significant opportunities for European companies seeking to diversify their supply chains. Meanwhile, North America and Europe are likely to attract more high-value projects in life sciences, aerospace, and defence. Defence and defence technology, in particular, should experience substantial growth as governments worldwide commit to expanding their defence budgets.
Another defining trend will be the surge of FDI into critical minerals and resources. As the global economy accelerates its transition to clean energy and advanced technologies, demand for lithium, cobalt, nickel, and rare earth elements will intensify. Countries that can leverage not only the extraction of these minerals, but also downstream processing and value-added manufacturing, will emerge as the biggest winners in the competition for quality FDI.
Courtney Fingar: supply chain shifts, uncertainty, and policy changes will make FDI decisions more selective
Founder and principal of Fingar Direct Investment, senior advisor, Europe and Communications, WAIPA
In 2026, FDI is likely to remain under pressure from a slowing global economy and persistent geopolitical tension. Weaker growth prospects and ongoing uncertainty around trade, security and industrial policy will continue to weigh on cross-border investment decisions, particularly for capital-intensive and long-horizon projects.
At the same time, the reordering of global value chains will remain a defining feature of FDI flows. Companies are increasingly prioritising resilience, proximity to markets and political alignment over pure cost efficiency, reshaping where and how investment takes place. This shift will create challenges for traditional export-led locations while opening opportunities for countries and regions able to position themselves as stable, well-connected and strategically aligned partners.
FDI in 2026 is therefore likely to be more selective, more policy-sensitive and more concentrated in sectors linked to energy, digital infrastructure, advanced manufacturing and critical technologies. For investment locations, success will depend less on volume and more on credibility, execution and the ability to align with evolving corporate and geopolitical priorities.”
