Foreign direct investment (FDI) has become the major economic driver of globalisation, accounting for over half of all cross border investments. In the new context of the recent world economic crisis and subsequent economic downturn, FDI followed the world economic trend. FDI activity depends on...

Based on the estimation of a theoretically consistent gravity equation, together with a careful computation of transportation costs across countries and industries, the Paper first provides estimates of ‘border effects’ among EU countries. The second objective is to examine the reasons for...