Working Paper: The Destinations of State Trade Missions
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From 1997-2006, U.S. state governors led more than five hundred trade missions to foreign countries. Trade missions are potentially a form of public investment in export promotion. I create a theory of public investment by introducing government to a Melitz (2003) - Chaney (2007) trade model. Controlling for state and country characteristics, the model predicts a relationship between missions and exports by destination. I create a data set on trade missions and match it with state export data, both with destination information. I estimate this relationship in the data, and reject the hypothesis that missions are to random destinations.