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State Visits and International Trade

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  • Volker Nitsch

Abstract

Politicians travel extensively abroad, for various reasons. One purpose of external visits is to improve bilateral economic relations. In this paper, I examine the effect of state visits on international trade. Based on a large data set that covers the travel activities of the heads of state of France, Germany and the United States for the period from 1948 to 2003, I find that state and official visits are indeed positively correlated with exports. I first apply a gravity model of trade to control for other trade determinants and find that a visit is typically associated with higher exports by about 8 to 10 per cent; the results are sensitive to the type of visit (as they should). I then use a differences-in-differences specification to deal with the issue of reverse causality. The results show a strong, but short-lived effect of visits on bilateral exports growth, which is driven by repeated visits to a country. Additional support is provided by an exploratory instrumental vari-ables analysis. Copyright 2007 The Author Journal compilation Blackwell Publishing Ltd. 2007 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 30 (2007)
Issue (Month): 12 (December)
Pages: 1797-1816

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Handle: RePEc:bla:worlde:v:30:y:2007:i:12:p:1797-1816

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References

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  1. Rose, Andrew K, 2002. "Do We Really Know that the WTO Increases Trade?," CEPR Discussion Papers 3538, C.E.P.R. Discussion Papers.
  2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  3. Andrew K. Rose, 2007. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," The World Economy, Wiley Blackwell, vol. 30(1), pages 22-38, 01.
  4. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
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Cited by:
  1. Yakop, M. & van Bergeijk, P.A.G., 2009. "The weight of economic and commercial diplomacy," ISS Working Papers - General Series 18715, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  2. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Export Promotion: Heterogeneous Programs and Heterogeneous Effects," IDB Publications 36759, Inter-American Development Bank.
  3. Christian Volpe Martincus & Antoni Estevadeordal & Andrés Gallo & Jessica Luna, 2010. "Information Barriers, Export Promotion Institutions, and the Extensive Margin of Trade," IDB Publications 39358, Inter-American Development Bank.
  4. Inês Veloso Ferreira & Aurora A. C. Teixeira, 2012. "Organizational Characteristics and Performance of Export Promotion Agencies: Portugal and Ireland compared," GEE Papers 0046, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Jan 2012.
  5. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martínez-Serrano, José Antonio, 2014. "Do nonreciprocal preferential trade agreements increase beneficiaries' exports?," Journal of Development Economics, Elsevier, vol. 107(C), pages 291-304.
  6. Andrew J. Cassey, 2012. "California'S Exports And The 2004 Overseas Office Closures," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 641-651, 07.
  7. Andrew J. Cassey, 2010. "State Trade Missions," Working Papers 2010-13, School of Economic Sciences, Washington State University.
  8. Moons, S.J.V. & van Bergeijk, P.A.G., 2013. "A meta-analysis of economic diplomacy and its effect on international economic flows," ISS Working Papers - General Series 50074, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  9. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
  10. Salvador Gil-Pareja, 2011. "Do nonreciprocal preference regimes increase exports?," ERSA conference papers ersa11p1561, European Regional Science Association.
  11. Filippo Vergara Caffarelli & Giovanni Veronese, 2013. "Italy’s system for supporting internationalization," Questioni di Economia e Finanza (Occasional Papers) 196, Bank of Italy, Economic Research and International Relations Area.
  12. Rubén Segura-Cayuela & Josep M. Vilarrubia, 2008. "Uncertainty and entry into export markets," Banco de Espa�a Working Papers 0811, Banco de Espa�a.
  13. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Is Export Promotion Effective in Developing Countries? Firm-Level Evidence on the Intensive and Extensive Margins of Exports," IDB Publications 36763, Inter-American Development Bank.
  14. Christian Volpe Martincus & Jeronimo Carballo & Andres Gallo, 2011. "The impact of export promotion institutions on trade: is it the intensive or the extensive margin?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(2), pages 127-132.
  15. Petra Bubáková, 2013. "Gravity Model of International Trade, Its Variables, Assumptions, Problems and Applications," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2013(2), pages 3-24.
  16. Mahmut Yasar & David Lisner & Roderick Rejesus, 2012. "Bilateral trade impacts of temporary foreign visitor policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(3), pages 501-521, September.

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