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This paper aims to identify the main causes of bilateral trade flows in OECD countries. The specific features of the study include the explicit introduction of R&D and FDI as the two important explanatory variables, conduct of unit root tests in the panel data framework and careful consideration of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to bilateral trade, while the distance, measured by both geographical distance and relative factor endowment, between trade partner countries has a negative impact. These findings lend support to new trade, FDI and new growth theories. [ABSTRACT FROM AUTHOR]

(1250) Eric Hazard, Lotje De Vries, Mamadou Alimou Barry and Alexis Aka Anouan, with Nicolas Pinaud African countries have deepened their commercial and diplomatic relationships with China and India, and Senegal has been no exception. The historical context of the relationships, however, has differed. While Senegal already enjoyed a long-lasting and stable relationship with India, relations with China have been more erratic, in particular on account of Dakar’s recognition of the Republic of China. We analyse trade and investment patterns with the Asian Drivers and how Senegal can form a relationship with these two superpowers that can contribute to its national development objectives. Contrary to other countries in Africa, Senegal is not a large producer of natural resources other than phosphates and fisheries and its consumer market is also rather limited. We find scarce evidence of large-scale FDI flows and the amount of official development assistance is similarly anecdotic. For China and India, Senegal is of some interest as a logistical and commercial centre, rather than a production base for regional or foreign markets. Over the longer run, as these two countries are likely to become more important for Senegal simply on account of their increasing relevance on the world stage, we argue that it is essential that the authorities take these factors into account in developing policies that cater for economic development and social priorities. [ABSTRACT FROM AUTHOR]