The Foreign Service and Foreign Trade: Embassies as Export Promotion
30 Pages Posted: 27 Jul 2005
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The Foreign Service and Foreign Trade: Embassies as Export Promotion
Date Written: March 2005
Abstract
As communication costs fall, foreign embassies and consulates have lost much of their role in decision-making and information-gathering. Accordingly, foreign services are increasingly marketing themselves as agents of export promotion. I investigate whether exports are in fact systematically associated with diplomatic representation abroad. I use a recent cross-section of data covering 22 large exporters and 200 import destinations. Bilateral exports rise by approximately 6-10% for each additional consulate abroad, controlling for a host of other features including reverse causality. The effect varies by exporter, and is non-linear; consulates have smaller effects than the creation of an embassy.
Keywords: International, import, destination, country, empirical, data, panel, consulate, gravity
JEL Classification: F13
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