Working Paper: NBER ID: w11111
Authors: Andrew K. Rose
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 twenty-two large exporters and two-hundred 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: Foreign Service; Export Promotion; Diplomatic Representation; Bilateral Trade; Gravity Model
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic mass (A13) | exports (F10) |
| economic distance (R39) | exports (F10) |
| exports (F10) | presence of foreign missions (F53) |
| presence of foreign missions (F53) | exports (F10) |