We examine the roles of major trade languages in international trade and foreign direct investment (FDI) flows. Empirical results confirm that speaking a common language increases trade and FDI flows, yet the effect of major languages is more substantial in FDI than in international trade. In...

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...