Premium
The effect of diplomatic representation on trade: A panel data analysis
Author(s) -
Visser Robin
Publication year - 2019
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12676
Subject(s) - representation (politics) , margin (machine learning) , panel data , economics , function (biology) , homogeneous , set (abstract data type) , international trade , data set , econometrics , international economics , computer science , political science , statistics , law , mathematics , combinatorics , machine learning , evolutionary biology , politics , biology , programming language
This study addresses current gaps in the empirical literature regarding the effect of diplomatic representation on trade using a panel data set for 100 countries with 5‐year interval data from 1985 to 2005 and four‐digit level industry data. The results indicate that the effect of diplomatic representation on exports in differentiated goods is positive and significant and larger than on exports in homogeneous goods on average, but not statistically different from it. Furthermore, diplomatic representation only increases trade along the extensive margin and not along the intensive margin. The results indicate that diplomatic representation is effective in performing its function as a network search intermediary and that it is a useful policy tool to alleviate market failure.