Technical Paper: The Impact of Diplomatic Representation Abroad on Canada's Exports

C.D. Howe Institute Technical Paper

21 Pages Posted: 9 May 2014  

Dan Ciuriak

Ciuriak Consulting Inc.; C.D. Howe Institute; Centre for International Governance Innovation (CIGI); BKP Development Research & Consulting GmbH

Date Written: April 16, 2014

Abstract

This Technical Paper presents the methodology and results the author’s C.D. Howe Institute E-Brief of the same name. The economic literature provides evidence that diplomatic posts abroad have significant impacts on exports; at the same time, the literature shows that there are significant differences in the effectiveness of export promotion across the various instruments of export promotion as well as across contexts, products, and destinations. This study examines the impact of having diplomatic representation in a country on Canada’s exports to that country, for different classes of goods and across different economic contexts. Using the gravity modeling framework, the study revisits the issue of the impact of Canada’s diplomatic representation abroad on exports. It confirms that economic diplomacy boosts exports – and quite significantly – and adds to the existing literature by shedding light on the questions of where, why and how. The study concludes that the impact is greater for the first, main post (usually an embassy) than for additional consulates; that the impact is stronger on undifferentiated commodities than for manufactured goods; and that the impact is greater in countries which are characterized by lesser degrees of economic freedom. The results, which also show the positive impact of trade agreements on exports, point to a separate, significant effect of diplomatic relations on trade that is over and above the export gains from having additional Trade Commissioner “boots on the ground” in Canada’s targeted export destinations.

Keywords: Trade promotion, economic diplomacy, embassies, consulates, posts, Canada

JEL Classification: F14

Suggested Citation

Ciuriak, Dan, Technical Paper: The Impact of Diplomatic Representation Abroad on Canada's Exports (April 16, 2014). C.D. Howe Institute Technical Paper . Available at SSRN: https://ssrn.com/abstract=2433981

Dan Ciuriak (Contact Author)

Ciuriak Consulting Inc. ( email )

83 Stewart St.
Ottawa, Ontario K1N 6H9
Canada

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

BKP Development Research & Consulting GmbH ( email )

Romanstrasse 74
München, 80639
Germany

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