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Sizing Up the Impact of Embassies on Exports
Author(s) -
Ferguson Shon,
Forslid Rikard
Publication year - 2019
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12260
Subject(s) - promotion (chess) , closing (real estate) , business , panel data , significant difference , international economics , economics , service (business) , control (management) , international trade , economy , econometrics , finance , statistics , mathematics , management , politics , political science , law
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.