Soft Power and Exports: Impact on Global Trade
Soft power, as defined by Andrew K. Rose, plays a significant role in influencing trade dynamics between nations. This study delves into the measurement and effects of soft power on international trade relationships using rigorous quantitative methods over a substantial time span. The impact of leadership styles, cultural attractiveness, and political ideals on trade outcomes is explored to better understand the role of soft power in shaping global economic interactions.
Uploaded on Feb 26, 2025 | 0 Views
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Soft Power, and Exports Soft Power, and Exports Andrew K Rose NUS-Business, ABFER, CEPR and NBER
Soft Power and Trade Immediately: does Trump s Leadership Style affect trade in and of itself? Hard power is the ability to coerce Grows out of country s military and economic might Soft Power (Nye) arises from attractiveness of country s culture, political ideals and policies the ability to attract, [since] attraction often leads to acquiescence soft power uses a different type of currency (not force, not money) to engender cooperation an attraction to shared values ... More Generally: does soft power have a detectable effect? Here: does it affect trade? Soft Power and Exports: Andrew Rose 2
How is Soft Power Measured? Measurement Issues Critical My needs: 1. Rigorous (not some arbitrary weighted average) 2. Quantitative 3. Panel, with non-trivial time-span 4. Bilateral across countries Soft Power and Exports: Andrew Rose 3
My preferred measure(s) Gallup asks ( 1000) participants in (>150) countries: Do you approve or disapprove of the job performance of the leadership of China/Germany/Russia/UK/USA A standard measure of soft power Alternatives exist (deliver similar results) BBC/GlobeScan asks people in (>40) countries about (17) other countries: Please tell me if you think each of the following are having a mainly positive or negative influence in the world? Pew Research asks people in (>60) countries about (27) other countries: Please tell me if you have a very favorable, somewhat favorable, somewhat unfavorable or very unfavorable opinion of _____? Soft Power and Exports: Andrew Rose 4
Informally: Trump has Harmed US Soft Power Average Foreign Views about the United States Unweighted Means from up to 157 Countries |--------------- Obama ----------------| Approval |--------------- Obama ----------------| Disapproval |--------------- Obama ----------------| Net Fraction Approval 60 60 .3 50 50 .2 40 40 .1 30 30 0 -.1 20 20 2006 2012 2017 2006 2012 2017 2006 2012 2017 Gallup: Do you approve or disapprove of the job performance of the leadership of the United States? Soft Power and Exports: Andrew Rose 5
Still, a Range of Views Across Countries Foreign Views about American Leadership Box Plots of Surveys from up to 157 Countries Approve Disapprove Net Fraction Approval 100 100 |------------ Obama ----------------| |------------ Obama ----------------| |------------ Obama ----------------| 1 80 80 .5 60 60 0 40 40 -.5 20 20 -1 0 0 '06'07'08'09'10'11'12'13'14'15'16'17 '06'07'08'09'10'11'12'13'14'15'16'17 '06'07'08'09'10'11'12'13'14'15'16'17 Gallup: Do you approve or disapprove of the job performance of the leadership of the United States? Soft Power and Exports: Andrew Rose 6
Histograms of Gallup Net Approval Foreign Views about the Leadership of Four Exporters Histograms of net fraction approval, up to 157 countries China, 2006 Germany, 2006 Russia, 2006 USA, 2006 2 2 2 2 1 1 1 1 0 0 0 0 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 China, 2012 Germany, 2012 Russia, 2012 USA, 2012 2 2 2 2 1 1 1 1 0 0 0 0 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 China, 2017 Germany, 2017 Russia, 2017 USA, 2017 2 2 2 2 1 1 1 1 0 0 0 0 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 -1 -.5 0 .5 1 Gallup: Do you approve or disapprove of the job performance of the leadership of ____? Soft Power and Exports: Andrew Rose 7
Heterogeneity Critical Cross-country variation allows panel estimation Time-Series variation allows within estimation (fixed effects) Note that Trump about as popular as Bush So data within standard range of variation Soft Power and Exports: Andrew Rose 8
Importers of US Goods Preferred Obama Views of American and German Leadership Obama vs. Trump; 157 countries, symbol area proportional to exports Foreign Views of US Foreign Views of US Approve Disapprove 100 100 Average 2009-16 Average 2009-16 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Foreign Views of Germany Foreign Views of Germany Approve Disapprove 100 100 Average 2009-16 Average 2009-16 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Gallup: Do you approve or disapprove of the job performance of the leadership of US/Germany? Soft Power and Exports: Andrew Rose 9
Contrast China and Russia: Lined up on 45 Views of Chinese and Russian Leadership Obama vs. Trump; 157 countries, symbol area proportional to exports Foreign Views of China Foreign Views of China Approve Disapprove 100 100 Average 2009-16 Average 2009-16 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Foreign Views of Russia Foreign Views of Russia Approve Disapprove 100 100 Average 2009-16 Average 2009-16 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Gallup: Do you approve or disapprove of the job performance of the leadership of China/Russia? Soft Power and Exports: Andrew Rose 10
Bush vs. Trump; roughly comparable Perceptions of Leadership under Republican Presidents Bush vs. Trump; 157 countries, symbol area proportional to exports Foreign Views of US Foreign Views of US Approve Disapprove 100 100 Average 2006-08 Average 2006-08 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Foreign Views of Germany Foreign Views of Germany Approve Disapprove 100 100 Average 2006-08 Average 2006-08 25 50 75 25 50 75 0 0 0 25 50 2017 75 100 0 25 50 2017 75 100 Gallup: Do you approve or disapprove of the job performance of the leadership of US/Germany? Soft Power and Exports: Andrew Rose 11
But Does Soft Power Actually Affect Exports? Need to control for other export determinants via Gravity Model One country (e.g., US) trades more with countries which are: Larger in economic mass (GDP) Closer Geographically: distance, common land border Culturally: share language, colonial heritage Politically: regional trade agreement Gravity: a (rare) example of an economic model that works well in both theory and practice Fits well; large and similar (across study) effects of income, distance Heritage of Tinbergen (and Newton) Soft Power and Exports: Andrew Rose 12
Estimating Equation Least Squares with Dummy Variables (Head-Mayer LSDV): ln(Xijt) = SOFTPOWERijt + 1ln(Dij) + 2Langij + 3Contij + 4RTAijt + 5Colonyij + { it} + { jt} + ijt One-way trade flows a function of measures of distance (geography, language, policy, history) Fixed effects (exporter/importer x time) do most of the work, cover all monadic constant/time-varying determinants 55 Exporter-Year/1426 Importer-Year FE Soft Power and Exports: Andrew Rose 13
Data Bilateral DoTS data from IMF 2006-17, for 5 exporters, 157 importers, 6,331 observations, LS estimation CIA World Factbook for country-specific variables (All available online at my website) Soft Power and Exports: Andrew Rose 14
Soft Power Has a Big Effect! Log(Approval) .66** (.12) Log(Disapproval) -.35** (.10) Net Fraction Approval .91** (.20) -.83** (.09) .35* (.18) .79** (.30) .54** (.19) .83** (.02) 6,331 Log Distance Common Language Common Border Regional Trade Agreement -.77** (.09) .39* (.17) .76** (.29) .52** (.19) .81** (.20) 6,331 -.89** (.09) .38* (.18) .82** (.30) .60** (.20) .88** (.20) 6,331 Colonial Relationship Observations R2 .87 .87 .87 Soft Power and Exports: Andrew Rose 15
Result is Robust 1. Different Measures of Soft Power 2. Different cuts of the data, variants of the functional form, 3. Different estimators; Instrumental variables Dyadic (pair-specific) fixed effects PPML to account for zeros in regressand, heterogeneity ... Soft Power and Exports: Andrew Rose 16
Robustness: Different Measures of Soft Power Good Bad Net Observations Lag of Approval, Gallup .70** (.12) -.38** (.10) 1.02** (.20) 5,812 Current+1st+2nd Lags, ( 2 (1)), Gallup Log (Positive Influence), BBC .78** (27.8) -.41** (11.5) 1.08** (20.8) 4,166 .48** (.13) .77** (.22) -.30** (.10) 3,369 .62** (.22) 1,946 Log (Favorable Opinion),Pew .55** (.17) -.31* (.12) Soft Power and Exports: Andrew Rose 17
Sensitivity Analysis Ln Approval Ln Disapp Net Approv Ln Approval Ln Disapp Net Approv Drop gravity covariates Sub Exp, Imp, Time FE 1.45** (.14) .41** (.07) -.78** (.13) -.23** (.06) 2.15** (.23) .64** (.14) Drop Industrial Exporters Drop Industrial Importers 1.53** (.31) .93** (.15) -.86** (.30) -.44** (.11) 2.54** (.69) 1.31** (.25) Add Dyadic FE .03 (.05) .76** (.14) .66** (.12) -.06 (.04 -.43** (.12) -.33** (.10) .20* (.08) 1.01** (.22) .99** (.21) Drop >|2.5 | residuals Conventional standard errors IV (BBC inf; 975 obs) .62** (.10) .66** (.05) .39** (.12) -.32** (.09) -.35** (.04) -.28* (.12) .79** (.17) .91** (.08) .57** (.20) Drop 2006-09 Drop 2014-17 2009 .58** (.15) .53** (.18) -.26* (.11) -.39* (.15) .90** (.26) .71* (.28) IV (Pew favo; 835 obs) IV (others appr, <20% export) .53** (.13) .59** (.06) -.20 (.14) .03 (.05) .55** (.21) .41** (.09) 2014 Drop United States .73** (.14) -.43** (.12) 1.04** (.24) IV (others appr, <10% export) .24** (.08) .07 (.07) .15 (.12) Soft Power and Exports: Andrew Rose 18
PPML, with Dyadic FE added Ln Approval Ln Disapp Net Approv Ln Approval Ln Disapp Net Approv Default .052* (.022) -.024 (.022) .101** (.038) Drop 2006 .048* (.022) -.033 (.022) .109** (.037) Approval Level (not log), Gallup .0020** (.0007) -.0019** (.0007) n/a Drop 2017 .058** (.022) -.029 (.022) .116** (.039) Log (Influence), BBC .064** (.018) -.010 (.014) .077** (.029) Only industrial Exporters .070* (.029) -.058* (.023) .069* (.034) Log (Opinion),Pew .101** (.034) .002 (.027) .070 (.050) No industrial Importers .072* (.030) -.015 (.030) .153** (.053) Lag of Approval, Gallup .065** (.020) -.033 (.022) .131** (.036) Drop >|2.5 | residuals .034 (.022) -.018 (.021) .093** (.036) Current+1st+2nd Lags, ( 2 (1)), Gallup .104** (8.7) -.083* (4.0) .248** (15.6) Soft Power and Exports: Andrew Rose 19
How Big is the Soft Power Effect on Exports? A 1 percentage point improvement in leadership approval raises exports by .1% Average net approval by foreigners of the American leadership fell from +16.6% in 2016 (Obama s final year in office) to -7.4% in 2017 (the first year of the Trump presidency) Swing of 24 percentage points in average net approval lowers American exports by (.24*.91*$1.45tn ) .22% or $3.3 billion Probably more because both Canada and Mexico (largest US importers) had >50% declines in net American leadership approval Long run effects bigger than short run effects Conclude: non-traditional exports determinants measurable, significant Soft Power and Exports: Andrew Rose 20
