This study investigates the empirical determinants of foreign direct investment (FDI) in emerging, developed and developing economies. The recent digital revolution is increasing the competitiveness and influencing the flow of FDI. Therefore, this study examines the impact of technology and innovation on FDI in emerging economies. We also investigate the impact of governance and culture and the moderation effect of country governance on FDI in emerging economies. Motivated by the emerging economies outcome, we extend the study to developed and developing economies. We centralized our focus on digitalization and examine the impact of innovation on FDI and further investigated the moderation effect of digital infrastructure on FDI. Since FDI is an important source of external finance, we also study the impact of financial sector development on FDI in developed and developing economies.

Our results support the leapfrogging approach of emerging economies towards promoting innovation and enhancing technology adoption to drive FDI. Interaction effect of country governance further highlighted that better the governance of a country the impact of technology, innovation, corporate governance and culture in attracting inward FDI also increases. Further, innovation and digital infrastructure complement each other and increase the attractiveness of inward FDI in both developed and developing economies. However, the factors that encourage inward FDI are different in developed and developing economies. The growth of digital infrastructure promotes the growth of innovation, which in turn helps to attract FDI but, the significance of digitalization in attracting FDI is greater in developing economies than developed economies.

Overall, the study highlights that technology advancement in emerging, developed and developing economies is the key determinant for increasing international FDI movements. The progress of country governance and growth of digital infrastructure increases the efficiency of technology in attracting more FDI. Further, bank depth, stability and efficiency, together with the outreach of financial markets and insurance sector, support the flow of FDI.