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Impact of the Presence of Foreign Missions on Trade: Evidence from Turkey

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  • Bagir, Yusuf

Abstract

This paper analyzes the impact of presence of foreign missions on trade using Turkey’s unique expansion in its foreign mission network (37 new embassies in 8 years) as the source of variation in a dynamic panel data setting. The dependent variable is the trade between Turkey and 186 countries from 2006 to 2014. The results indicate that presence of an embassy increases export value by 27% and this increase comes mainly from volume effect. Categorizing goods by the Rauch (1999) classification shows that increase in differentiated goods exports explains almost all of the change in total export value. There is no statistically significant impact on the exports of homogeneous goods. Replication of the analysis for imports suggests that presence of an embassy leads to 70% increase in imports and this increase is entirely driven by the homogeneous goods imports.

Suggested Citation

  • Bagir, Yusuf, 2017. "Impact of the Presence of Foreign Missions on Trade: Evidence from Turkey," MPRA Paper 80845, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:80845
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    File URL: https://mpra.ub.uni-muenchen.de/80845/1/MPRA_paper_80845.pdf
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    References listed on IDEAS

    as
    1. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
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    3. Josep M Vilarrubia & Rubén Segura-Cayuela, 2008. "Uncertainty and entry into export markets," 2008 Meeting Papers 661, Society for Economic Dynamics.
    4. Rubén Segura-Cayuela & Josep M. Vilarrubia, 2008. "The effect of foreign service on trade volumes and trade partners," Working Papers 0808, Banco de España;Working Papers Homepage.
    5. Keith Head & John Ries, 2010. "Do trade missions increase trade?," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 754-775, August.
    6. 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, January.
    7. Volker Nitsch, 2007. "State Visits and International Trade," The World Economy, Wiley Blackwell, vol. 30(12), pages 1797-1816, December.
    8. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    9. Andrew J. Cassey, 2010. "State Trade Missions," Working Papers 2010-13, School of Economic Sciences, Washington State University.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    International Economics; Foreign Missions; Turkey; International Trade; Embassy;

    JEL classification:

    • F0 - International Economics - - General
    • F00 - International Economics - - General - - - General
    • F1 - International Economics - - Trade
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H0 - Public Economics - - General

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