The Foreign Service and Foreign Trade: Embassies as Export Promotion

As communication costs fall, foreign embassies and consulates have lost much of their role in decision‐making and information‐gathering. Accordingly, foreign services are increasingly marketing themselves as agents of export promotion. I investigate whether exports are in fact systematically associated with diplomatic representation abroad. I use a recent cross‐section of data covering 22 large exporters and 200 import destinations. Bilateral exports rise by approximately six to ten per cent for each additional consulate abroad, controlling for a host of other features including reverse causality. The effect varies by exporter, and is non‐linear; consulates have smaller effects than the creation of an embassy.