When and How Country Reputation Stimulates Export Volume

We examine the linkage between country reputation and export volume by matching data from a global survey in twenty countries around the world with actual export data to fifty of their trading partners. We argue that country reputation can be a novel means to reduce quality uncertainty and relational uncertainty, thereby enhancing export volume. We test the hypotheses using the well-established structural model of international trade. We find that each improvement in a world ranking of a country’s reputation for products in a target country is associated with a 2% increase in exports to that particular country (an effect equivalent to the importing country decreasing a tariff by as much as 2.9%). Furthermore, different aspects of country reputation – for its products and its people – attenuate distinct forms of uncertainty, and thereby stimulate export volume in distinct ways. We examine the linkage between country reputation and export volume by matching data from a global survey in twenty countries around the world with actual export data to fifty of their trading partners. We argue that country reputation can be a novel means to reduce quality uncertainty and relational uncertainty, thereby enhancing export volume. We test the hypotheses using the well-established structural model of international trade. We find that each improvement in a world ranking of a country’s reputation for products in a target country is associated with a 2% increase in exports to that particular country (an effect equivalent to the importing country decreasing a tariff by as much as 2.9%). Furthermore, different aspects of country reputation – for its products and its people – attenuate distinct forms of uncertainty, and thereby stimulate export volume in distinct ways.