We study the impact of country image on international trade flows. We find that a one percentage point increase in the positive response ratio - the proportion of people in the importing country who view the exporting country positively - is associated with at least a one percent increase in the aggregate trade flow. By disaggregating trade flows by the type of goods, we also find that both homogeneous and differentiated goods are positively affected by better country image and that the impact of country image tends to be larger when more substitutes are available in the international market.
Economics | International Economics
CHANG, Pao Li and FUJII, Tomoki.
Country Image and International Trade. (2012). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1402
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