We analyze a sample of 65 countries to examine the national structural and cultural determinants of R&D investment. Our findings suggest the existence of a legal effect, wherein other structural determinants are effective only in countries with a strong rule of law. Additionally, we find that cultural openness and long-term orientation are positively associated with R&D investment. While innovation efficiency attracts foreign R&D investment, innovation efficacy acts as a deterrent, as profitable innovation opportunities are typically seized by domestic investors. Furthermore, we identify a substitution effect, in which the government compensates for insufficient investment from both domestic and foreign investors.