Discussion paper

DP4953 The Foreign Service and Foreign Trade: Embassies as Export Promotion

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.

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Citation

Rose, A (2005), ‘DP4953 The Foreign Service and Foreign Trade: Embassies as Export Promotion‘, CEPR Discussion Paper No. 4953. CEPR Press, Paris & London. https://cepr.org/publications/dp4953