Fragmentation in Foreign Direct Investment [US Paper]

Recent geopolitical tensions and weaknesses in global supply chains have started to reshape how countries and companies approach Foreign Direct Investment (FDI). A new study has found that these changes are causing fragmentation in global investment patterns — meaning, investments are no longer as widely spread or neutral as they once were.

The study explains that FDI is now increasingly shaped by political ideologies and geography. This fragmentation is happening in five major ways:

1. Ideological Sorting – Countries and companies are pulling back from investing in ideologically distant or politically different nations.
2. Friendshoring – Investors are now favoring politically aligned countries or “friendly” nations.
3. Derisking – There’s a growing effort to reduce exposure to high-risk countries, especially where political instability or global sanctions may be involved.
4. Nearshoring – Companies are starting to move their production closer to their home countries for better control and security.
5. Reshoring – In some cases, firms are even bringing investment and production back home entirely.

Download Report PDF (This Report is available for Premium Users Only. Click here to join premium)