Global foreign direct investment is recovering, but the recovery is far from uniform.
UN Trade and Development (UNCTAD) estimates that global FDI rose 6% to approximately $1.6 trillion in 2025. However, more than 80% of global FDI was concentrated in the 20 largest host economies, while investment growth across developing economies remained modest. At the same time, the OECD reports that greenfield investment weakened, highlighting a more selective approach to new international capacity.
For investors, the headline figure matters less than what sits behind it: where capital is moving, which sectors are attracting it and how businesses are managing risk before committing to a jurisdiction.
1. Global Capital Is Becoming More Selective
International investors are increasingly comparing jurisdictions on the quality of the operating environment rather than cost alone.
Market access, infrastructure, regulatory predictability, skilled talent and the ability to scale are becoming decisive factors in location strategy. A jurisdiction may offer attractive entry costs, but that advantage can quickly disappear if businesses face regulatory uncertainty, infrastructure constraints or difficulty accessing regional markets.
For investment committees, the question is increasingly whether a jurisdiction can support the business after entry, not simply facilitate entry.
2. Strategic Sectors Are Driving a Larger Share of Investment
The composition of FDI is changing as governments and businesses prioritise sectors considered critical to future economic capacity.
UNCTAD reports that strategic sectors such as AI infrastructure, semiconductors, critical minerals and energy-transition technologies accounted for 44% of global greenfield investment value in 2025, compared with 16% in 2020.
This shift is changing location decisions. Investors in capital-intensive and technology-driven sectors are assessing access to reliable energy, digital infrastructure, industrial ecosystems, supply chains and specialised talent alongside traditional investment incentives.
The strongest investment destinations will increasingly be those capable of supporting the entire operating model, rather than offering an attractive entry proposition alone.
3. Greenfield Investment and M&A Tell Different Stories
The recovery in headline FDI should not be interpreted as a broad-based return to expansion.
According to the OECD, announced greenfield projects declined by 14% in 2025, while associated capital expenditure fell by 3%. Cross-border M&A, however, remained comparatively resilient.
This distinction matters because investors are using different routes to enter international markets. Acquiring an established business can provide immediate infrastructure, customers and local capabilities, while greenfield investment offers greater control over the operating model but requires a larger upfront commitment.
The appropriate route increasingly depends on the investor’s risk appetite, time horizon and strategic objectives.
4. Geopolitical Risk Is Moving Into Investment Due Diligence
Geopolitical exposure is no longer something investors assess after selecting a market. It is increasingly part of the location decision itself.
UNCTAD identifies trade policy uncertainty, geopolitical tensions, conflict, financing conditions and economic fragmentation among the factors affecting the 2026 investment outlook.
For businesses considering international expansion, this means assessing whether the chosen jurisdiction can support operations if trade routes change, regional tensions escalate or regulatory conditions shift.
Supply-chain resilience, regulatory predictability and workforce mobility are consequently becoming part of the investment case.
5. Choosing a Jurisdiction for Long-Term Growth
Investors need to look beyond market entry and assess whether a jurisdiction can support the business as it grows. Regulatory certainty, market access, infrastructure, talent and operational resilience should form part of the decision.
Global FDI is recovering, but capital is becoming more selective. Investors are looking beyond incentives and incorporation timelines to understand whether a market can support sustainable operations and long-term growth.
How Northman & Sterling Supports International Investors
At Northman & Sterling, we work with international businesses evaluating cross-border investment and market entry. Our advisory covers corporate structuring, regulatory requirements, employment, immigration and workforce mobility, helping investors assess the practical implications of establishing and scaling operations in new jurisdictions.
The objective is straightforward: turn an investment decision into an operating structure that is legally sound, commercially workable and capable of supporting long-term growth.