Kearney's Global Business Policy Council today released its 2024 Foreign Direct Investment Confidence Index (FDICI), a survey of investor sentiment regarding future (three-year) FDI flows. This year's results reflect continued investor optimism about the global economy. A striking 88 percent of respondents across the world said they were planning to increase their FDI in the next three years—up 6 percent from last year. Furthermore, 89 percent—up from 86 percent in 2023—said that FDI would be more important to their corporate profitability and competitiveness in the next three years. And their level of net enthusiasm about the global economy rose markedly as well. While the optimism level grew only marginally to 64 percent, net pessimism decreased notably from 35 to 29 percent compared with last year.

For the 12th consecutive year, the United States takes the top ranking on the world rankings. Canada retains the 2nd position, and China jumps to 3rd place from the rank of 7th last year. The United Kingdom increases one rank to 4th, Germany drops one notch to 5th, and France maintains its 6th-place position. Notably, Japan drops from 3rd to 7th, while the United Arab Emirates makes a striking leap from 18th to 8th, perhaps on the back of ongoing business and legal reforms. While this year's survey continues to demonstrate investor preference for developed markets—accounting for 17 out of 25 of the markets on the main Index—two more emerging markets than last year made the top 25 rankings.

The second annual ranking for emerging markets welcomes newcomers to the top 25. Seven of the 25 markets on the Index—Poland, Chile, Romania, Peru, Hungary, Uruguay, and Oman—joined the list for the first time. China, the United Arab Emirates, Saudi Arabia, India, Brazil, Mexico, Poland, and Argentina make up the top eight positions, and they are the only emerging markets included in the world index rankings. Regionally, the Americas has the most markets on the list with nine, followed by Asia Pacific at seven, the Middle Eastand Africa at five, and Europe at four. Southeast Asia continues to show strength, with Thailand, Malaysia, Indonesia, and the Philippines all among the top 15.

Despite overall optimism on the state of FDI, investors are wary about mounting risks in the global operating environment, not least of which is the geopolitical turbulence that has been growing in various regions of the world. Indeed, investors anticipate continued geopolitical tensions in 2024. Eighty-five percent believe an increase in geopolitical tensions will affect investment decisions, with some firms deciding to nearshore and/or friendshore as a result. Investors also anticipate that a more restrictive business regulatory environment in both developed and emerging markets is likely to pose risks in the year ahead.

Report co-author Erik R. Peterson, partner and managing director of Kearney's Global Business Policy Council, also points to mounting regulatory complexity as a potential risk for investors to watch: "The rise of industrial policies and trade restrictions could lead to a more heavy-handed regulatory environment across markets that investors will need to address." He adds, "Regulations on emerging technologies, especially AI, will also increasingly come into effect in the near term with profound implications for businesses and investors alike."

The Index this year explores AI and the impact of technology and regulation in general on investor operations. A notable 72 percent of investors say they are making significant or moderate use of AI in their business operations. They anticipate their businesses will use AI for customer service and chatbots, automation of manual processes, and supply chain enhancement. Further, 63 percent of investors say their organization will make significant or moderate increases in AI usage to guide their investment decisions. They cite cost or efficiency savings and decision-making accuracy as the top benefits they gain when using AI in their investment decision-making.

"Investor enthusiasm for AI and technology innovation is reflected throughout our 2024 Index results," says report co-author Terry Toland, manager at the Global Business Policy Council. "Investors not only view the AI capabilities of destination markets as important when deciding where to invest but are also leveraging the technology directly to inform and enhance the investment decision-making process."