No file matches include / exclude patterns Error when updating runtime (node14 -> node16)

[urig-40seas]

Hey 👋🏻

I attempted to upgrade my stack to use Node.js version 16 instead of Node.js 14.
However, following the update, I encountered the following error during deployment: No file matches include/exclude patterns.

I followed advice from various sources and removed the package.exclude from my config entry, which eliminated the error. However, this action resulted in my serverless setup crashing after deployment with Runtime.ImportModuleError errors 😔
It seems that the node_modules are no longer linked to the serverless file, preventing it from running.

I see similar issues about the 'No file matches include / exclude patterns' error but they are not related to node upgrade.

I don't understand how a change in the Node.js version led to this issue. I would greatly appreciate any assistance you could provide 🙏🏻

My configuration:

  ...
 service: ...,
        plugins: [
            'serverless-plugin-optimize',
            'serverless-offline',
            'serverless-localstack',
            'serverless-domain-manager',
            'serverless-plugin-datadog',
            'serverless-prune-plugin',
             'serverless-associate-waf',
        ],
        provider: {
            name: 'aws',
            runtime: 'nodejs16.x', <-- 🚨 changed from nodejs14.x that worked
            ...
   
            iamRoleStatements: [
              ...
            ],
        },
        custom: {
            'serverless-offline': {
                useChildProcesses: true,
                noPrependStageInUrl: true,
               ..
            },
           ..
            localstack: {
                host: 'http://localhost',
                debug: true,
                ..
            },
        },
        package: {
            individually: true,
            exclude: ['./**'], <-- 🚨 if i remove this the 'No file matches include / exclude patterns' disappears but the app crashes later 
        },
        functions: {
            api: {
                timeout: 30,
                handler: 'src/dist/serverless.handler',
                package: {
                    include: ['dist/**/*', '!dist/**/*.map', 'node_modules/**/*'],
                  },
            },
        },
    };