The Effect of Foreign Service on Trade Volumes and Trade Partners

Segura-Cayuela, Rubén; Vilarrubia, Josep M.

doi:10.2139/ssrn.1126598

Cited by 53 publications

(13 citation statements)

References 38 publications

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“…The reported t ‐statistics (Table ) vary considerably between studies. A number of studies have insignificant mean and/or median t ‐values (Polachek, ; Head and Ries, ; Biglaiser and DeRouen, ; Bobonis and Shatz, ; Nitsch, ; Segura‐Cayuela and Vilarrubia, ; van Bergeijk et al., , ; Ferguson and Forslid, ; van Veenstra et al., ). Others such as Gil et al.…”

Section: The Datamentioning

confidence: 99%

Does Economic Diplomacy Work? A Meta‐analysis of Its Impact on Trade and Investment

Moons¹,

Bergeijk²

2016

World Economy

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We review the literature on economic diplomacy and provide a meta‐analysis of 32 empirical studies published in 1986–2011 that deal with the trade and investment impact of economic diplomacy (embassies, consulates, other diplomatic facilities, investment and export promotion offices, trade and state visits). Controlling for differences in research design, methodology, time frame and manner of data, we find a positive and significant effect of economic diplomacy on international economic flows with the exception of state visits and that this is true in a sample of 627 t‐statistics analysed with OLS and for a larger sample of 963 reported significance levels analysed with logit thus illustrating robustness with respect to sample and estimation technique. Our analyses show that reported effects of economic diplomacy on trade and investment in individual studies are sensitive to model specification. The primary studies that investigate only one source country are less likely to report significant positive effects. Compared to other sciences, economic studies are less likely to report significantly positive effects of economic diplomacy. Primary studies lump embassies and consulates (general) into one indicator miss that these instruments differ significantly. Embassies, consulates and agencies should thus be included as separate instruments in future research.

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Section: The Datamentioning

confidence: 99%

Does Economic Diplomacy Work? A Meta‐analysis of Its Impact on Trade and Investment

Moons¹,

Bergeijk²

2016

World Economy

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“…There is empirical evidence to show a positive effect of export promotion agencies and their activities on aggregate trade flows (Rose 2007;Segura-Cayuela and Vilarrubia 2008), as well as on the number of countries reached by existing exporters and the number of products traded Carballo 2008, 2010). However, those studies focussing specifically on the probability of firms engaging in exporting to date have found no significant effect of state expenditure on export promotions (see Bernard and Jensen 2004;Görg et al 2008).…”

Section: Discussionmentioning

confidence: 99%

Domestic transport infrastructure and firms’ export market participation

2011

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Investment in transport infrastructure reduces the cost of distance and enables firms to establish contacts over larger distances. Using data from a panel of Spanish manufacturing firms and geographic information system techniques, this article studies the impact of domestic transport cost reductions on firms' export market participation, taking into account the role of entry costs and other firm characteristics. We estimate dynamic probability models, controlling for the unobserved heterogeneity of firms and for the simultaneity of firms' export and location decisions. Our results demonstrate a positive effect of domestic transport infrastructure improvements on small and medium-sized firms' probability of exporting.

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“…The very origins of diplomacy during the second and third millenniums BC were rooted in the coordination of trade and economic relations between ancient city‐states (Cohen :5–6), and trade promotion has continued to be an explicit objective of foreign diplomatic missions (Afman and Maurel ). Frequently, such missions house export promotion authorities, commercial services departments, or trade departments that, in conjunction with diplomatic missions themselves, “have been widely used to promote export activities of countries, with the goal of increasing export volumes, the number of firms that engage in export activities, the number of countries reached by domestic firms, and the diversification of those exporting activities in markets and goods” (Segura‐Cayuela and Vilarrubia :9). Consider, for example, the US State Department, which now includes among its main operating strategies: (i) “Promoting peace and stability in regions of vital interest,” (ii) “Creating jobs at home by opening markets abroad ,” and (iii) “Helping developing nations establish stable economic environments that provide investment and export opportunities ” (emphasis added)…”

Section: Theorymentioning

confidence: 99%

“…Accordingly, scholars have widely reported a positive link between diplomatic missions and trade flows (Rose ; Gil et al. ; Segura‐Cayuela and Vilarrubia ; Afman and Maurel ). Alliances and diplomatic ties also generate a range of additional policy and security externalities that can increase trade and trade stability indirectly.…”

Section: Theorymentioning

confidence: 99%

“…An explicitly stated aim of diplomatic missions, and the trade promotion authorities that they often contain, is the diversification of a host‐country's trade and investment portfolios. Indeed, “[e]xport promotion agencies, foreign missions, and foreign service have been widely used to promote export activities of countries, with the goal of increasing export volumes, the number of firms that engage in export activities, the number of countries reached by domestic firms, and the diversification of those exporting activities in markets and goods ” (9, Segura‐Cayuela and Vilarrubia :emphasis added). Anecdotal evidence supports this claim.…”

Section: Theorymentioning

confidence: 99%

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The Stabilizing Effects of International Politics on Bilateral Trade Flows

Bagozzi

Landis

2013

Foreign Policy Anal

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International trade volatility can do serious harm to a country's economic and political stability. Recent research suggests that international trade agreements can reduce such volatility by reinforcing extant trade commitments, improving transparency, promoting policy convergence, and strengthening investor confidence. Drawing on this logic, we posit that international political ties can also produce notable reductions in a country's export volatility. Specifically, we argue that diplomatic missions and military alliances signal lower discount rates, increase political transparency, and enhance issue linkages among trading partners. These enhancements in turn work to stabilize a dyad's export flows. To empirically test this argument, we use a gravity model to evaluate the effects of directed diplomatic relations and alliances on bilateral export volatility for over 150 countries from 1950-1999. Controlling for confounding variables and exploring a wide array of model specifications, we find that the establishment of diplomatic relations or alliances with a trading partner can significantly reduce a country's bilateral export volatility. These results provide robust support for our main hypotheses.

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The Effect of Foreign Service on Trade Volumes and Trade Partners

Cited by 53 publications

References 38 publications

Does Economic Diplomacy Work? A Meta‐analysis of Its Impact on Trade and Investment

Does Economic Diplomacy Work? A Meta‐analysis of Its Impact on Trade and Investment

Domestic transport infrastructure and firms’ export market participation

The Stabilizing Effects of International Politics on Bilateral Trade Flows

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