Digital technologies are transforming our societies by fundamentally altering the way we work, live, interact, produce, and consume. Although technology was always a force of change, it is the speed, scope, and combinatorial effect of the emerging digital technologies that enables this exponential digital transformation and sets Industry 4.0 apart, as a new, distinct era. The transition was accelerated even more by the COVID-19 pandemic and the fast-track digitalization process throughout economies and societies alike.
During this digital revolution, a new group of businesses, the Digital Multinational Enterprises (Digital MNEs) has emerged. Digital MNEs disrupt traditional patterns of production, job creation and asset structure, are primarily driven by innovation, and place digital technologies at the epicenter of their business and operating models. Digital MNEs also reshuffle international production patterns and have led to the emergence of a new type of foreign investments, the "Digital & Innovation FDI". Experience suggests that in addition to the manifested direct benefits from this type of investments in a host economy, there are also incipient ones, best described as "spillover benefits". FDI in digital and innovation is a powerful mechanism of cross-border technology and knowledge transfer that can enable host countries to boost their digital adoption, increase their productivity, boost local innovation, and integrate in global value chains.