The Diplomacy of Trade: An Empirical Investigation of State Visits as a Tool for Export Promotion and the Specific Role of the Head of State

Sammanfattning: This paper evaluates the impact of state visits on export flows and the specific role of the head of state based on the five Nordic countries: Denmark, Finland, Iceland, Norway, and Sweden. We construct a complete and comprehensive dataset containing all outgoing state visits from the Nordic countries between 1973 and 2022. Our main empirical strategy is to apply a difference-in differences (DiD) approach using a novel robust estimation method by Callaway and Sant’Anna (2021) to estimate the effect of state visits on export flows and the role that the head of state plays during state visits. We also employ a traditional two-way fixed effects (TWFE) DiD approach to compare the results. Furthermore, we employ a series of placebo tests and robustness checks to validate our results. Our analysis reveals that outgoing state visits made by the Nordic countries have a significant impact on export flows with an average post-treatment effect of 276.8 million USD. The role of the head of state is less pronounced, although our results indicate that state visits conducted by monarchs drive the results more than state visits performed by presidents.