Does economic diplomacy influence international trade? Evidence from Tanzania

Mgeni Msafiri and Vincent Leyaro

No 2024-05, Discussion Papers from University of Nottingham, CREDIT

Abstract: Diplomatic relations have potential to enhance international trade by minimizing potential risks that firms encounter in their foreign operations, especially for developing countries. This has been a driving force for government intervention in international trade and investment through economic diplomacy. Using bilateral trade data for the period 1997 – 2019, this study examines the impact of economic diplomacy measured by the presence of embassies in Tanzania and in importer countries on Tanzanian exports and imports. The study uses augmented Pseudo Poisson Maximum Likelihood estimation to account for large proportion of zero trade flows, and a lagged trade variable to correct for the potential reverse causality of opening diplomatic representations. Results show that, on average, Tanzania exports more to countries that host Tanzanian embassies, and imports more from countries that have embassies in Tanzania. Results underscore the effective role of economic diplomacy in reducing trade barriers and foster international trade; implying that as a country Tanzania needs to enhance and strengthen its economic diplomacy with her trading partners.

Keywords: economic diplomacy; international trade; Tanzania (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-afr and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nottingham.ac.uk/credit/documents/papers/2024/2405.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:not:notcre:24/05

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, CREDIT School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().