Sizing Up the Impact of Embassies on Exports

Abstract

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.

Keywords

Heterogeneous firms; trade promotion

Published in

Scandinavian Journal of Economics
2019, volume: 121, number: 1, pages: 278-297

SLU Authors

• Ferguson, Shon

  • Research Institute of Industrial Economics

UKÄ Subject classification

Business Administration

Publication identifier

• DOI: https://doi.org/10.1111/sjoe.12260

Permanent link to this page (URI)

https://res.slu.se/id/publ/101557