Resilience and Green FDI in 2026: Strategies for Economic Development Organisations amid Megaprojects and Supply-Chain Shifts

Foreign direct investment (FDI) is entering a period of structural change. Global FDI flows fell by 11% in 2024 to roughly US $1.5 trillion, with developed economies seeing steep declines while North America’s inflows were buoyed by large semiconductor projects. Asia remained the largest host region, but investment into China fell by 29%, while ASEAN countries recorded a 10% increase to US $225 billion. T&A Consulting helps economic development organisations (EDOs) and investment promotion agencies (IPAs) navigate this complex environment with data-driven insights, sector expertise and extensive networks across India, Southeast Asia, Europe and the Americas.

Introduction: A New Chapter for Global FDI

The United Nations Conference on Trade and Development (UNCTAD) reports that global FDI flows fell by 11% in 2024. Indian inflows dipped slightly yet greenfield momentum remained strong, reflecting an underlying shift from cost-driven manufacturing to resilience-driven regional clusters. Incentives now account for roughly 45% of new investment policy measures, and the number of countries with FDI screening regimes has doubled since 2015, evidence of the openness-security paradox and growing geopolitical competition.

Despite this turbulence, FDI remains a critical engine for jobs and growth. The 2026 FDI Outlook survey of 101 experts highlights cautious optimism: respondents believe that resilience, selective openness and innovation will underpin new cross-border flows. They emphasise that critical industries, from digital services and data centres to renewable energy and health, will be the backbone of investment, and that investment sources are shifting eastward towards Southeast Asia and the Middle East.

2026 FDI Landscape: Resilient, Regional and Selectively Green

The recent volatility is not merely cyclical; it reflects a structural transformation. Global value chains are being reshaped as companies diversify suppliers, prioritise resilience over cost and build regional production clusters. Investors are shifting from efficiency-driven global footprints to geographically diversified networks that can weather geopolitical shocks and supply-chain disruptions. Three foundational shifts stand out:

• Geopolitical positioning and regional integration. Countries are repositioning themselves within economic blocs or as neutral connectors, leveraging trade agreements and regional corridors. Southeast Asia has emerged as a preferred base for “China+Many” strategies; between 2019 and 2023 FDI into China fell 17%, while FDI to Southeast Asia increased about 20%. Indonesia received around US $33 billion in greenfield manufacturing FDI in 2023 and Vietnam about US $16 billion, reflecting a rapid shift of export-oriented manufacturing.
• Strategic reorientation towards digital and green technologies. The focus is shifting to sectors less vulnerable to global shocks, such as data centres, advanced manufacturing, renewable energy and health technologies. The average greenfield project size rose from US $53.6 million in 2019 to US $86.5 million in 2025 thanks to multi-billion-dollar data-centre investments. Low-emissions hydrogen FDI announcements now total roughly US $160 billion per year, about 50% more than conventional energy FDI, although only a tenth of projects in the EU and United States have reached final investment decisions.
• Intelligence-driven promotion and asset-light modes. Generic investment promotion is becoming obsolete. IPAs must leverage data and insights to target resilience-driven investors, sustainability-driven industries (renewable energy, creative industries), technology-intensive projects (advanced manufacturing, robotics, AI services) and asset-light modes such as contract manufacturing and licensing. Institutional investors, including sovereign wealth funds, pension funds and private equity, are gaining prominence, requiring new engagement strategies.

Sectoral and Technological Trends: From Megaprojects to Green Hydrogen

The FDI outlook for 2026 is shaped by several sector-specific dynamics:

• Data centres and digital infrastructure. A global capacity rush has turned data-centre projects into megaprojects; 2024-2025 saw average project sizes increase sharply and a strong pipeline is expected in 2026. These facilities underpin the growth of cloud computing, artificial intelligence (AI) and quantum technologies, making them attractive for host locations with abundant renewable energy and robust connectivity.
• Renewables and low-carbon power. Renewables accounted for nearly half of the global power capacity mix in 2025; solar photovoltaic (PV) made up 64% of capacity additions and wind 16%, while solar costs have fallen 81% since 2010 and are projected to decline another 21% in the next five years. Solar capacity is expected to reach 3 terawatts by the end of 2025, and renewables overtook coal for the first time. FDI into low-emission hydrogen projects has surged, creating potential new fuel trade routes between the Middle East and Europe and between Australia and East Asia.
• Electric vehicles and advanced manufacturing. The boom in electric-vehicle (EV) FDI is slowing as China’s dominance and market uncertainty weigh on new projects; EV FDI activity declined in 2024-2025 and recovery will depend on supportive policies and charging infrastructure. Meanwhile, Southeast Asian economies are competing to become EV hubs; Thailand aims for EVs to comprise 30% of its vehicle production by 2030.
• Military and strategic technologies. Global military spending reached US $2.7 trillion in 2024. FDI project numbers in military technology are expected to increase by 33% in 2025. Security concerns and dual-use technologies are tightening screening regimes but also creating opportunities for countries that position themselves as safe, innovation-friendly locations.

These trends point to larger, more capital-intensive projects concentrated in sectors aligned with the digital and green transitions. For EDOs and IPAs, the challenge is to prepare sites and ecosystems capable of hosting megaprojects while ensuring that smaller, asset-light modes are not overlooked.

Implications for EDOs and IPAs: Opportunities and Risks

Opportunities

• Resilience-driven investments. Companies seeking supply-chain resilience are looking for locations with diversified production networks, reliable infrastructure and supportive policies. Regions that can offer access to multiple markets via trade agreements will be attractive.
• Green and digital industries. Renewable energy, low-emission hydrogen, data centres, AI and health technologies are growth sectors. Host locations with abundant renewable resources and skilled talent can position themselves as hubs for green hydrogen and digital infrastructure.
• Institutional investors and megaprojects. The rise of sovereign wealth funds and pension funds means IPAs must cultivate relationships with long-term capital providers and prepare bankable project pipelines.
• Local supply-chain development. As multinationals emphasise regional sourcing, there is scope for supplier development programmes, cluster development and joint ventures.

Risks and Complexities

• Geopolitical fragmentation. Trade disputes, investment screening and technology controls can delay or deter projects. EDOs must monitor changes in national security regulations and align with compliance requirements.
• Competition and incentives. With incentives accounting for nearly half of all new investment measures, “incentive wars” may erode tax bases. Transparent, performance-based incentives that emphasise sustainability and skills are preferable.
• ESG and community expectations. Investors increasingly scrutinise environmental, social and governance (ESG) practices. Host communities demand local benefits and minimal environmental impacts, especially for large energy and infrastructure projects.
• Talent shortages. Advanced industries require specialised skills. Regions with weak education and training systems may struggle to capture FDI in AI, renewable energy and life sciences.

Policy Environment: Balancing Openness and Security

The openness-security paradox is evident in policy trends. 46 countries now have FDI screening mechanisms, double the number in 2015, and screening often targets technology and critical infrastructure. At the same time, incentives such as India’s Production-Linked Incentive (PLI) schemes remain a key tool to attract investment; India offers sector-specific incentives for electronics, pharmaceuticals, medical devices and automotive components, with the government aiming to achieve US $300 billion in electronics production by FY26.

Industrial policies in many jurisdictions now integrate climate goals and digital transitions. The United States’ Inflation Reduction Act (IRA) and the European Union’s Green Deal provide tax credits and grants for renewable energy and battery manufacturing. Meanwhile, the rise of digital public infrastructure, such as India’s Unified Payments Interface (UPI), demonstrates how open, interoperable platforms can reduce transaction costs and encourage formalisation. Policies that foster innovation while maintaining cyber-security will be critical.

How T&A Consulting Supports EDOs and IPAs in 2026

T&A Consulting understands that attracting investment in 2026 demands more than general promotion. Our approach is grounded in data-driven insights, sector expertise and extensive networks across India, Southeast Asia, Europe and the Americas.

• Market intelligence and sector prioritisation. We provide rigorous analysis of FDI trends, sector opportunities and competitor landscapes. For example, we help identify which segments within renewables, such as solar, wind and green hydrogen, offer the most promise based on cost curves and policy incentives, and map potential investors.
• Investor targeting and pipeline building. Using proprietary databases and customised research, we build tailored lists of target companies and institutional investors, focusing on resilience-driven and green sectors. We assist IPAs in crafting value propositions that align with investors’ sustainability agendas and supply-chain needs.
• Site readiness and ecosystem development. For regions aspiring to host megaprojects or data-centre investments, we conduct feasibility assessments, benchmark infrastructure and labour availability, and coordinate with utilities and service providers to ensure investment-ready sites.
• Policy and incentive advisory. We help design transparent, performance-linked incentive packages that attract quality investments without creating fiscal burdens. Our teams advise on aligning regional incentives with national policies such as PLI schemes and green finance initiatives.
• ESG integration and community engagement. We support clients in embedding ESG criteria into investment projects, ensuring that social and environmental considerations are addressed. This includes stakeholder consultations, impact assessments and ESG reporting frameworks.
• Aftercare and supply-chain localisation. Retaining investors is as crucial as attracting them. We assist with aftercare programmes, supplier development and partnerships with local SMEs to maximise spill-over benefits.

Resilience, sustainability and digitalisation will shape investment flows. Economic development organisations and investment promotion agencies must adopt intelligence-driven strategies that balance openness with security and target sectors that will define the next decade.
Contact us at: pnijhawan@taglobalgroup.com to discuss how we can help your organisation seize the opportunities of this new investment era.

Sources & references:
UNCTAD, fDi Intelligence, McKinsey, FT Locations, Investment Monitor, World Economic Forum, T&A Global Group