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Paying a Visit: The Dalai Lama Effect on International Trade
Andreas Fuchs and Nils-Hendrik Klann

Published in: Journal of International Economics 91(1): 164-177, September 2013






Abstract
Is political compliance a precondition for healthy trade relations with China? The Chinese government frequently threatens that meetings between its trading partners’ officials and the Dalai Lama will be met with animosity and ultimately harm trade ties. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test the extent to which bilateral tensions affect trade with autocratic China. In particular, we empirically investigate whether countries that receive the Dalai Lama despite China’s opposition experience a significant reduction in their exports to China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this ‘Dalai Lama Effect’ is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears in the second year after a meeting took place.

Published article
Accepted manuscript
Supplementary data
Working Paper (October 2010, revised April 2011)
Presentations at conferences and workshops
  • Meeting of the European Public Choice Society, Rennes, France (04/2011)
  • Annual Convention of the International Studies Association, Montréal, Canada (03/2011)
  • RWTH Aachen Research Seminar in Economics, Aachen, Germany (01/2011)
  • Simposio de la Asociación Española de Economía (SAEe), Madrid, Spain (12/2010)
  • CESifo Workshop on Political Economy, Dresden, Germany (11/2010)
  • Annual Conference of the European Trade Study Group, University of Lausanne, Switzerland (09/2010)
  • Silvaplana Workshop on Political Economy, Pontresina, Switzerland (07/2010)
  • Warsaw International Economic Meeting, University of Warsaw, Poland (07/2010)
  • Annual Conference of the Verein für Socialpolitik Research Committee Development Economics, Leibniz University Hannover, Germany (06/2010)
  • Workshop Beyond Basic Questions, Aarhus School of Business, University of Aarhus, Denmark (03/2010)
  • Göttinger Workshop Internationale Wirtschaftsbeziehungen, University of Goettingen, Germany (02/2010)

In the media (newspapers, blogs, books, TV)
Press release
See also