The effect of diplomatic representation on trade: A panel data analysis. (20th June 2018)

• Record Type: Journal Article
• Authors: Visser, Robin
• Is Part Of: World economy. Volume 42:Number 1(2019)
• Page Start: 197
• Page End: 225
• Publication Date: 2018-06-20
• Subjects: differentiated goods -- diplomatic representation -- extensive margin -- gravity model -- homogeneous goods -- intensive margin -- international trade; International economic relations -- Periodicals; 330
• DOI: 10.1111/twec.12676
• Languages: English
• ISSNs: 0378-5920

Abstract

Abstract: This study addresses current gaps in the empirical literature regarding the effect of diplomatic representation on trade using a panel data set for 100 countries with 5‐year interval data from 1985 to 2005 and four‐digit level industry data. The results indicate that the effect of diplomatic representation on exports in differentiated goods is positive and significant and larger than on exports in homogeneous goods on average, but not statistically different from it. Furthermore, diplomatic representation only increases trade along the extensive margin and not along the intensive margin. The results indicate that diplomatic representation is effective in performing its function as a network search intermediary and that it is a useful policy tool to alleviate market failure.