This paper compares the traditional gravity model with a bidirectional approach when multilateral resistance is implemented to analyze the effect of inward foreign direct investment (FDI) on exports. We use cross-sectional HS trade data disaggregated at a 6-digit level in 2010 with controls for...

We show that traditional gravity variables play a significant role in explaining trade flows related to global value chain participation. We find evidence that cooperation costs - measured by linguistic and geographical proximity - are more relevant for trade that reflects cross-border...