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Sizing Up the Impact of Embassies on Exports

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  • Shon Ferguson
  • Rikard Forslid

Abstract

The purpose of this study is to test for the effects of trade promotion via the foreign service. The theory of trade with heterogeneous firms predicts that unilateral trade promotion allows medium‐sized firms to export. We investigate the effects of trade promotion using firm‐level data and information on the opening and closing of embassies abroad from the very similar neighboring countries Sweden and Norway. We use a difference‐in‐difference specification where firms from Norway are used as a control group for Swedish firms. Our results show that large firms as well as medium‐sized firms respond to the opening of embassies.

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  • Shon Ferguson & Rikard Forslid, 2019. "Sizing Up the Impact of Embassies on Exports," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 278-297, January.
    • Handle: RePEc:bla:scandj:v:121:y:2019:i:1:p:278-297
    DOI: 10.1111/sjoe.12260
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    Cited by:

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    3. Huberman, Michael & Meissner, Christopher M. & Oosterlinck, Kim, 2017. "Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade," The Journal of Economic History, Cambridge University Press, vol. 77(1), pages 39-89, March.
    4. Ryo Makioka, 2021. "The impact of export promotion with matchmaking on exports and service outsourcing," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1418-1450, November.
    5. Andrew J. Cassey, 2016. "The Destinations of State Trade Missions," CESifo Economic Studies, CESifo Group, vol. 62(3), pages 547-571.
    6. Shang-Jin Wei & Ziru Wei & Jianhuan Xu, 2017. "Sizing up Market Failures in Export Pioneering Activities," NBER Working Papers 23893, National Bureau of Economic Research, Inc.
    7. Feng, Gen-Fu & Zheng, Mingbo & Wen, Jun & Chang, Chun-Ping & Chen, Yin E., 2019. "The assessment of globalization on innovation in Chinese manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 190-202.
    8. Vargas Da Cruz,Marcio Jose, 2014. "Do export promotion agencies promote new exporters ?," Policy Research Working Paper Series 7004, The World Bank.
    9. (ed.), 0. "Research Handbook on Economic Diplomacy," Books, Edward Elgar Publishing, number 16053.
    10. Agarwal, Natasha & Chan, Jackie M.L. & Lodefalk, Magnus & Tang, Aili & Tano, Sofia & Wang, Zheng, 2023. "Mitigating information frictions in trade: Evidence from export credit guarantees," Journal of International Economics, Elsevier, vol. 145(C).
    11. Lien, Donald & Lo, Melody, 2017. "Economic impacts of cultural institutes," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 12-21.
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    13. Firat Demir & Hyeonjin Im, 2020. "Effects of cultural institutes on bilateral trade and FDI flows: Cultural diplomacy or economic altruism?," The World Economy, Wiley Blackwell, vol. 43(9), pages 2463-2489, September.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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