Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2017:3: Sizing Up the Impact of Embassies on Exports

Shon Ferguson () and Rikard Forslid ()
Additional contact information
Shon Ferguson: Research Institute of Industrial Economics (IFN), Postal: Box 55665, SE-102 15 Stockholm, Sweden
Rikard Forslid: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: The purpose of this study is to test for the effects of trade promotion via the foreign service. Heterogeneous firms trade theory 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

JEL-codes: D21; D22; F12; F15

25 pages, June 26, 2017

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