AI as a Strategic Driver in Foreign Direct Investment Flows: Evidence of OECD Countries

This study examines how AI‐related capabilities and institutional signals shape foreign direct investment (FDI) inward and outward flows in OECD countries. Drawing on Dunning's OLI paradigm and North's Institutional Theory, the paper investigates whether AI Patent Grants, Newly Funded AI Firms and Mentions of AI in Legislative Proceedings influence foreign direct investment. Using panel data from 25 countries, we apply regression models to assess whether AI is perceived as a valid driver of foreign direct investing. Results demonstrate that Newly Funded AI Firms significantly increase investment flows supporting the notion that dynamic AI entrepreneurship strengthens advantages in line with the OLI eclectic paradigm. In contrast AI Patent Grants have a significant negative effect; from an OLI perspective, this may indicate that the sector is still in an early stage, without commercial maturity. Surprisingly the robustness checks did not find statistically significant differences for inward foreign direct investments. However, when the model is re‐estimated with additional control variables, AI Patent Grants regain statistical significance. AI Legislative Proceedings do not significantly affect investment flows, suggesting that investment decisions are affected more by regulations than formal legislative discussions. This research contributes to the emerging field of AI‐driven international business by reconceptualizing investments as a proactive AI strategy. The policy implications underscore the importance of AI‐compliant institutions and stronger support for multinational enterprises (MNEs). From a managerial perspective, the findings highlight AI as a critical axis for strategic planning across global value chains.