Does Economic Diplomacy Work? A Meta‐Analysis of its Impact on Trade and Investment

33 Pages Posted: 6 Jun 2020

See all articles by Selwyn Moons

Selwyn Moons

Erasmus University Rotterdam (EUR) - Institute of Social Studies (ISS)

Peter A. G. van Bergeijk

International Institute of Social Studies of Erasmus University

Date Written: February 2017

Abstract

We review the literature on economic diplomacy and provide a meta‐analysis of 32 empirical studies published in 1986–2011 that deal with the trade and investment impact of economic diplomacy (embassies, consulates, other diplomatic facilities, investment and export promotion offices, trade and state visits). Controlling for differences in research design, methodology, time frame and manner of data, we find a positive and significant effect of economic diplomacy on international economic flows with the exception of state visits and that this is true in a sample of 627 t‐statistics analysed with OLS and for a larger sample of 963 reported significance levels analysed with logit thus illustrating robustness with respect to sample and estimation technique. Our analyses show that reported effects of economic diplomacy on trade and investment in individual studies are sensitive to model specification. The primary studies that investigate only one source country are less likely to report significant positive effects. Compared to other sciences, economic studies are less likely to report significantly positive effects of economic diplomacy. Primary studies lump embassies and consulates (general) into one indicator miss that these instruments differ significantly. Embassies, consulates and agencies should thus be included as separate instruments in future research.

Suggested Citation

Moons, Selwyn and van Bergeijk, Peter A. G., Does Economic Diplomacy Work? A Meta‐Analysis of its Impact on Trade and Investment (February 2017). The World Economy, Vol. 40, Issue 2, pp. 336-368, 2017, Available at SSRN: https://ssrn.com/abstract=3620308 or http://dx.doi.org/10.1111/twec.12392

Selwyn Moons (Contact Author)

Erasmus University Rotterdam (EUR) - Institute of Social Studies (ISS) ( email )

PO Box 29776
Den Haag, 2518 AX
Netherlands

Peter A. G. Van Bergeijk

International Institute of Social Studies of Erasmus University

Kortenaerkade 12, 2518 AX
The Hague, 2518 AX
Netherlands

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