Foreign direct investment confidence (FDI) in Australia has improved, with the nation ranked seventh out of 25 economies, according to an international index.

The A.T. Kearney's 2016 survey showed that Australia had jumped three places since being ranked tenth in last year's the FDI Confidence Index.

The index also found that Australia and China, have been the only two economies in the Asian region ranked in the top ten since 2010.

The increases in local investment stock are consistent with A.T. Kearney's 2016 findings that Australia is seen as one of the most attractive foreign investment destinations in the world.

A separate analysis by the Australia Government of FDI data accumulated by the Australian Bureau of Statistics, also shows the rising importance of East Asia as a source of investment.  

The analysis of FDI by country between 2011 and 2015 found that the European Union, North America and East Asia accounted for the bulk of FDI inflows.

But it also revealed that East Asia's share of our FDI stock increased by 10 per cent, from 14 per cent in 2001 to 24 per cent in 2015.

More broadly, the USA again topped the A.T. Kearney index for the fourth year in a row demonstrating its resilience in the face of tardy global economic growth.

China claimed second place, also for the fourth consecutive year, with investor interest focusing on industrial, service, and IT companies.

At least 32 per cent of world's business executives are more optimistic than a year ago about the economic outlook over the next three years.

The 2016 Index found almost 75 per cent of global business executives planned to increase their FDI worldwide in the next three years.  This means investors are looking to deploy FDI for growth opportunities, despite slowing trade growth and rising macroeconomic uncertainty.

A.T. Kearney saw the availability of high-quality investment targets and the overall macroeconomic environment as reasons for planned investment.

The survey noted that a rising US dollar made investment in America more expensive. But declines in the Euro and other currencies, such as the Aussie dollar, made investment in those economies more attractive.

While Europe performed well on this year's survey at 13 of the top 25 positions, investors were targeting markets in the top ten, including five in Asia, three in Europe and two from America.

World business executives were more bullish on the US economic outlook than for any other nation, as the world's economy struggles to increase momentum.

Overall, five Asian countries - China, Japan, Australia, India and Singapore - feature in the top-ten ranking in the 2016 review, up from only three economies – China, Japan and Australia – in the 2015 survey.

The increased number of Asian countries in the top ten indicates the stronger confidence of global business leaders in the region's economic outlook.

The sources of FDI into Australia have changed over time, highlighting in particular the increasing importance of East Asia as well as the growing role played by some of the smaller, non-regional offshore financial centres (OFCs).

A.T. Kearney FDI Confidence Index 2016