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Paying a Visit: The Dalai Lama Effect on International Trade

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Listed author(s):
  • Fuchs, A.
  • Klann, N.

Abstract

The Chinese government frequently threatens that meetings between its trading partners’ officials and the Dalai Lama will be met with animosity and ultimately harm trade ties with China. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test to which extent bilateral tensions affect trade with autocratic China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this ‘Dalai Lama Effect’ is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears two years after a meeting took place.

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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1103.

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Date of creation: 26 Jan 2011
Handle: RePEc:cam:camdae:1103
Contact details of provider: Web page: http://www.econ.cam.ac.uk/

Keywords: International Trade; International Political Economy; Diplomatic Relations; Exports to China; Tibet; Dalai Lama;

Other versions of this item:

Find related papers by JEL classification:
  • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
  • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
  • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The Dalai Lama effect on international trade
    by Economic Logician in Economic Logic on 2010-12-07 15:00:00
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Cited by:

  1. Bala Ramasamy & Matthew C.H. Yeung, 2012. "Ethical distance and difference in Bilateral trade," Working Papers 11012, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  2. He, Yinghua & Nielsson, Ulf & Wang, Yonglei, 2014. "Hurting without Hitting: The Economic Cost of Political Tension," TSE Working Papers 14-484, Toulouse School of Economics (TSE), revised Jul 2015.
  3. Heilmann, Kilian, 2016. "Does political conflict hurt trade? Evidence from consumer boycotts," Journal of International Economics, Elsevier, vol. 99(C), pages 179-191.
  4. Strand, Jonathan R. & Zappile, Tina M., 2015. "Always Vote for Principle, Though You May Vote Alone: Explaining United States Political Support for Multilateral Development Loans," World Development, Elsevier, vol. 72(C), pages 224-239.

This item is featured on the following reading lists or Wikipedia pages:

  1. Economic Logic blog

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