Rapid population growth is often considered a barrier to economic advancement and strategic corporate investment. However, the nuances of this impact remain insufficiently explored. This study aims to explore the impact of population density and location choice on firms' investment decisions, elucidating how these elements shape enterprises' portfolio selections. To investigate this impact, data spanning ten years (2010–2019) from non-financial sector firms in China and Pakistan were scrutinized. Utilizing 2SLS and GMM models, we measured the external influence of these factors on both long-term and short-term investment strategies. The statistical analysis reveals that corporate firms originating from countries with high population growth rates, situated in densely populated areas, exhibit a predilection for long-term investments. This favorable trend can be attributed to heightened product demand and convenient access to local markets. Nevertheless, a comparative assessment between Pakistan and China delineates contrasting effects of location on short-term investments—positively impacting in the case of Pakistan and negatively affecting in the case of China. These findings carry significant implications for crafting regional development policies aimed at fostering industrial growth. Furthermore, beyond conventional determinants, this study introduces fresh perspectives on the role of demographic and geographic factors in shaping industrial investments, addressing a gap in existing literature where similar analyses are absent.