Thought leadership

Rethinking FDI strategy in an era of uncertainty

A strategic approach to FDI enables IPAs and EDOs to focus limited resources, respond to global shifts, and attract high-value, future-ready investment. Key priorities include diversification, cross-border collaboration, and aligning with long-term economic and sustainability goals

May 12, 2025
By Agnese Sturmane

Executive summary

Did you know that 80% of successful FDI projects result from targeted campaigns? World Bank 2023

Regardless of an organisation’s size or a community’s resource level, one reality remains: everyone has limited resources to attract companies, investment, and foreign direct investment (FDI). While all investment can benefit a local economy, FDI goes further - it builds future-ready ecosystems, creates better-paid jobs, connects communities to global supply chains, and accelerates innovation through technology spillovers.

However, the global competition for investment is intensifying. Countries aiming to leverage FDI for economic growth must present a compelling, strategic value proposition - and back it with coordinated, data-driven execution.

Here are seven reasons why every Investment Promotion Agency (IPA) and Economic Development Organisation (EDO) needs a focused, future-oriented FDI strategy:

1. Adapting to constant change and geopolitical uncertainty

A birds eye view of a shipping dock

From geopolitical tensions to new tariffs, incentives, conflicts, and emerging technologies - the global investment landscape is in flux. According to McKinsey’s latest global economic survey, business leaders now view trade policy changes and geopolitical instability as equally significant threats to global economic growth.

What does that mean for EDOs and IPAs? Even if you’ve developed an FDI strategy in the past, it’s likely outdated. To remain competitive, your strategy should reflect current growth sectors, geopolitical realities, and shifting investor priorities. Reassess target industries and markets regularly - because what worked three years ago may no longer apply.

In this environment, companies are actively seeking ways to de-risk their supply chains and avoid trade disruptions.

For IPAs and EDOs, this is an opportunity to evolve from simply "pitching a location" to offering solution-oriented investment cases. Investors now seek partners who understand their challenges and provide stability, resilience, and value.

2. Sharper focus and alignment

Two people collaborating on a whiteboard together.

Team members today are juggling multiple priorities - often working in hybrid environments and with increasing autonomy. A clearly defined strategy keeps everyone aligned, focused, and effective. With a shared roadmap, teams can:

Better understand key industries and players
Build tailored value propositions
Allocate resources efficiently (e.g. for trade shows or marketing)
Avoid random, scattered activities

Focus breeds impact. A well-aligned team moves faster, speaks with one voice, and delivers better outcomes.

3. Enabling cross-border collaboration

Illustration of a pin

A strong strategy allows organisations to think beyond their own jurisdiction. Collaboration across city, county, state, and national levels unlocks synergies that benefit everyone. But too often, agencies approach industries in silos, duplicating efforts and missing opportunities.

By understanding not just your own value proposition - but that of the broader ecosystem - you can coordinate, pool resources, and present a unified front to investors.

4. Making the most of limited resources

Illustration of a lightbulb

Developing an FDI strategy may seem like a heavy lift, especially with constrained budgets, but the cost of not having a strategy - or relying on an outdated one - is far higher. In a resource-constrained environment, efficiency and prioritisation are everything.

Your strategy should reflect current capabilities, leverage emerging technologies, and identify high-return opportunities. The more limited your resources, the more strategic you must be.

5. Achieving long-term goals (ESG & SDG)

Wind turbines on grass

Many FDI strategies focus only on existing industries. But a forward-looking approach helps communities attract the industries of the future - those aligned with sustainability, digitalisation, and inclusive growth.

From climate tech and clean energy to artificial intelligence, cybersecurity, the space economy, and quantum computing - today’s investments are building the foundations of tomorrow’s economy.

Strategic planning is critical for aligning FDI with long-term ESG and SDG goals.

6. Diversification: reducing vulnerability

Computer chip up close

While sector focus is important, overreliance on a single industry or source market increases vulnerability. The COVID-19 crisis made this painfully clear, especially for tourism-dependent economies that suffered massive income loss and rising debt-to-GDP ratios.

Diversification supports equitable growth, sustainable development, and long-term economic resilience. Countries with broader FDI portfolios - across sectors and investor origins - tend to attract more total investment. Ongoing trade uncertainties, such as those stemming from U.S. policy shifts, further underscore the need for diversification - not only in trade, but also in investment strategies, industries, and target markets.

A strong example is the Gulf Arab countries, which are actively diversifying their economies to reduce dependence on oil. They’re investing in sectors such as tourism, renewable energy, finance, technology, and education to build long-term resilience.

In short, economies are stronger and more resilient when they avoid putting all their eggs in one basket.

7. Measuring what matters

Illustration of a cog

Without a strategy, how do you measure progress? How do you justify spending, refine tactics, or support better policy?

A clear strategic framework enables you to:

Set KPIs
Track and evaluate performance
Report outcomes and demonstrate impact
Inform and advise policymakers

According to the 2025 Kearney FDI Confidence Index©, the efficiency of legal and regulatory frameworks and domestic economic performance are tied as the top two drivers of FDI decisions. This underscores the vital role of IPAs and EDOs in advocating for pro-business, pro-growth policies that stimulate investment.

There’s also a strong correlation between economic freedom and FDI attractiveness. Policies that promote entrepreneurship, open markets, and minimal regulatory barriers tend to draw greater foreign investment.

How to reevaluate your strategy:

A compass on a map

Follow the data: Leverage real-time data to identify high-growth sectors, emerging technologies, and geographies with shifting investment patterns. Go beyond static reports - use dynamic tools and industry intelligence to stay ahead of trends.
Adapt continuously: Reassess your strategy - and update your targets, messaging, and tactics accordingly.
Create a compelling value proposition: Go beyond the basics. Every location touts things like low taxes, skilled labor, or proximity to major markets - those are table stakes. Instead, focus on what truly differentiates your community, region, or zone. Investors aren’t just looking for incentives; they’re looking for solutions to their long-term business challenges.
Benchmark your community: Think like an investor. Compare your community’s value proposition honestly against peer locations. Assess costs, risks, infrastructure, and quality of life from a business decision-making lens - not just a marketing one.
Innovate and differentiate: Don’t follow the crowd. Experiment. Drop what doesn’t work.
Seek unbiased support: Bring in outside experts to challenge assumptions, surface blind spots, and offer fresh, strategic perspectives.

Having worked for a national IPA and collaborated with hundreds of EDOs globally, I can’t stress this enough: strategy is not a luxury - it’s a necessity. The worst thing an agency can do is copy and paste last year’s plan and expect better results.

So, as you head into planning season:

Reassess your target sectors and geographies
Evaluate the ROI of trade shows and marketing tools
Consider a rolling 2–3 year strategy that allows for agile adjustments
Seek partnerships and synergies with regional allies

Conclusion: Don’t just do more, do better

Strategic FDI attraction isn’t just about getting projects - it’s about shaping the future of your community.