Discussion Paper Details

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Title: Agent Orange: Trump, Soft Power, and Exports

Author(s): Andrew K Rose

Publication Date: August 2018

Keyword(s): approval, data, empirical, Gallup, Gravity, international, leadership, panel and positive

Programme Area(s): International Macroeconomics and Finance and International Trade and Regional Economics

Abstract: A country's exports rise when its leadership is approved by other countries. I show this using a standard gravity model of bilateral exports, a panel of data from 2006 through 2017, and an annual Gallup survey which asks people in up to 157 countries about whether they approve of the job performance of the leadership of China, Germany, Russia, the United Kingdom and the United States. Holding other things constant, a country's exports are higher if its leadership is approved by the importer, since; 'soft power' promotes exports. The Gallup effect is statistically and economically significant; a one percent increase in leadership approval raises exports by around .66 percent. This effect is reasonably robust and different measures of soft power deliver similar results. I conservatively estimate that the >20 percentage point decline in foreign approval of American leadership between 2016 (Obama's last year) and 2017 (Trump's first year) lowered American exports by at least .2% or >$3 billion.

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Bibliographic Reference

Rose, A. 2018. 'Agent Orange: Trump, Soft Power, and Exports'. London, Centre for Economic Policy Research.