Foreign direct investment (FDI) to the global South has increased, but very little research has gone into analysing the diverse FDI flows between unequally related groups of countries. This paper contributes by investigating (a) the distribution of global FDI into and between semi‐peripheral and peripheral countries in the global South (2006–2014), and (b) the country location factors of FDI in these two regions. We introduce a distinction between multinational enterprises from emerging (EMNE) and from peripheral countries (PMNE) and show evidence of their different investment behaviour. Our results uniquely demonstrate intra‐regional investment differences, the increasing sophistication of peripheries as hosts and sources of FDI (developmental undercurrents) and a rich set of location factors explaining FDI into these regions. We also show that EMNEs invest in semi‐peripheral countries so as to benefit from their emerging capacity to innovate.