Foreign Direct Investment (FDI) is not only a transfer of capital, but a complex bundle of capital and firm-specific assets like production and management know-how. In particular, the transfer of production know-how improves overall productivity of FDI-receiving firms and to some extent also...

This paper implements a panel data approach for studying the determinants of and relationships between bilateral economic activities in terms of both trade and foreign direct investment between the EU member states. The familiar equation for testing the determinants of bilateral exports is...