Resilience (and Talent) are Driving FDI Decisions

The landscape of Foreign Direct Investment (FDI) has fundamentally shifted. While cost-saving was once the dominant metric, corporations are now prioritizing factors that ensure long-term stability, technological superiority, and resilience. This analysis explores the core drivers influencing major corporate expansion decisions between 2024 and 2025, with a particular focus on the non-financial element that has risen to the top: specialized human capital.

Global Landscape: Key Metrics at a Glance

The overall global FDI momentum continues its post-pandemic recovery, but the nature of that investment is changing dramatically. Here are five core metrics defining the current investment environment:

The (Still) Critical Role of Talent & Workforce

Talent and specialized human capital have transcended traditional HR concerns to become the number one non-financial driver influencing where FDI lands. The decline of access to key skills can now outright disqualify an investment location, regardless of cost advantages.

Driver Focus: Talent Availability & Cost
The key analysis evaluates the following factors:

• Availability: The presence of a specialized, skilled workforce, often concentrated in innovation clusters (e.g., biotech, AI research).

• Education: Companies scrutinize educational output and alignment with industry needs.

• Stability: Crucially, firms analyze labor flexibility, competitive labor costs, and critically, attrition rates, seeking environments where specialized talent is likely to remain stable.

The impact of talent availability and pipeline for R&D, Advanced Manufacturing, and Digital Services investments is critical.

Beyond Cost: The Top Future Investment Drivers

FDI decision-making involves a complex, multi-factor checklist. Talent anchors the strategic side, but several other qualitative factors weigh heavily on the corporate expansion strategy:

• Geopolitical Stability

  Prioritizing stability over cost, driving 'China+1' or 'friend-shoring' strategies.

• Digital Readiness

  Evaluating 5G, cloud infrastructure, and data privacy laws for digital hubs.

• ESG Frameworks

  Requiring strong government policies supporting environmental, social, and governance compliance.

• Regulatory Flexibility

  Assessing ease of doing business, legal predictability, and IPR protection; bureaucracy is a deterrent.

• Local Incentives

  Fiscal stimuli and grants, often serving as the tie-breaker for equally attractive locations.

• Market Access

  Proximity to large, growing consumer markets or strategic trading blocs.

The Strategic Shift: Resilience in the Supply Chain

Manufacturing FDI shows a pronounced shift from "just-in-time" to "just-in-case" planning; supply chain resilience now heavily outweighs cost reduction.

The top five factors driving new manufacturing investment, ranked by importance score (out of 10):

1. Supply Chain Resilience (Stability): 9.5

2. Cost of Specialized Labor: 8.8

3. Proximity to Target Markets (Nearshoring): 8.0

4. Regulatory Ease & Tax Rate: 7.2

5. Access to Raw Materials: 6.5

Stability and talent are non-negotiable foundations, with nearshoring gaining importance to reduce transit times and exposure to disruptions.

Stability is King?

The future of FDI is specialized. Corporations no longer chase the lowest cost; they seek the most skilled workforce and the most stable operational environment. Jurisdictions focusing on high-value talent clusters, improved digital infrastructure, and guaranteed stability are best positioned to capture the next wave of global capital investment.