Abstract
This paper empirically investigates the determinants of outward foreign direct investment (OFDI) of British multinational firms in the European Union (EU) and the European Free Trade Association (EFTA) members across 2009-2019 using a general equilibrium theory of MNE location choice and the Bayesian model averaging (BMA). We find evidence that supports the existence and dynamic behavior of the East-West structure of FDI between the core-EU, CEE, and the Nordic economies. As well as negative effects of the Eurozone crisis and Brexit anticipation. Further, our analysis documents the importance of host country characteristics such as relative market size, urbanization, rule of law, and location of a major seaport in attaining horizontal FDI in the core-EU economies. While infrastructure spending and enhanced political stability are important for post-2000 EU accession members in attracting FDI. The results remain robust in cases where we account for potential profit-shifting of MNEs to partners such as Luxembourg or the Netherlands, and use hypothetical (estimated) FDI stock levels.