Why some cities and regions join the wealthy ‘world innovation club’ while others remain persistently excluded? What can public policies do in order to reduce the gap between innovative and non-innovative places?  These questions will be addressed by focusing on the transformative power of the flows of capital, skills and knowledge bundled into FDI and increasingly complex global value chains (GVCs). The first part of this talk will discuss some key stylised facts on internationalisation, FDI and global connectivity and will show how they play a key role in shaping local technological trajectories. The second part will discuss the practical problems faced by public policies when trying to actively leverage FDI in order to boost innovation in domestic firms in less developed regions.  The final part of the talk will discuss the political consequences of the lack of practical and effective responses to regional inequalities, further exacerbated by economic (dis-)integration.