Trading representation: Diplomacy’s influence on preferential trade agreements

Abstract

A multidisciplinary literature explores the implications of economic diplomacy, but has largely ignored international cooperation on economic agreements. We provide a first exploration of the implications of bilateral diplomatic missions for the formation of preferential trade agreements (PTAs). We argue that high-level diplomatic relations increase the likelihood of PTA ratification between two countries because diplomats have a number of political and economic incentives to see these agreements implemented. Evidence from a global panel of country dyads spanning 1960–2005 indicates that the presence of ambassadors is linked to an increased probability that a PTA will be concluded within a dyad, opening new avenues for further research.