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Paying a Visit: The Dalai Lama Effect on International Trade

Center for European Governance and Economic Development Research Paper No. 113

48 Pages Posted: 20 Oct 2010 Last revised: 27 Apr 2011

Andreas Fuchs

University of Heidelberg - Alfred Weber Institute for Economics

Nils-Hendrik Klann

University of Goettingen (Gottingen) - Department of Economics

Date Written: October 19, 2010

Abstract

The Chinese government frequently threatens that meetings between its trading partners’ officials and the Dalai Lama will be met with animosity and ultimately harm trade ties with China. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test to which extent bilateral tensions affect trade with autocratic China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this ‘Dalai Lama Effect’ is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears two years after a meeting took place.

Keywords: International Trade, International Political Economy, Diplomatic Relations, Exports to China, Tibet, Dalai Lama

JEL Classification: F13, F51, F59

Suggested Citation

Fuchs, Andreas and Klann, Nils-Hendrik, Paying a Visit: The Dalai Lama Effect on International Trade (October 19, 2010). Center for European Governance and Economic Development Research Paper No. 113. Available at SSRN: https://ssrn.com/abstract=1694602 or http://dx.doi.org/10.2139/ssrn.1694602

Andreas Fuchs (Contact Author)

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

HOME PAGE: http://www.uni-heidelberg.de/fakultaeten/wiso/awi/professuren/intwipol/fuchs_en.html

Nils-Hendrik Klann

University of Goettingen (Gottingen) - Department of Economics ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

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