While the effects of cultural disparity and common institutional foundations on international trade and foreign direct investment (FDI) have been much analyzed, little analysis of languages' transaction costs has been done in either the international relations or international business...

This paper employs gravity models to analyze the influence of Confucius Institutes (CI) on outward trade and FDI flows from China. We find significant increases in both Chinese exports and outward FDI flows to developing countries through establishment and operation of CIs, but little impact on...