Agent Orange: Trump, Soft Power, and Exports
A country’s exports rise when its leadership is approved by other countries. I show this using a standard gravity model of bilateral exports, a panel of data from 2006 through 2017, and an annual Gallup survey which asks people in up to 157 countries whether they approve of the job performance of the leadership of China, Germany, Russia, the United Kingdom and the United States. Holding other things constant, a country’s exports are higher if its leadership is approved by the importer; ‘soft power’ promotes exports. The soft power effect is statistically and economically significant; a one percent increase in leadership approval raises exports by around two-thirds of a percent. This effect is reasonably robust, and different measures of soft power deliver similar results. I conservatively estimate that the >20 percentage point decline in foreign approval of American leadership between 2016 (the final year of Obama’s presidency) and 2017 (Trump’s first year) lowered American exports by at least $3 billion.
The data set, key output, and a current version of this paper are available online. For comments and help, I thank: Lionel Bellier, Asher Isaac, and Tom Zylkin. For hospitality during the course of writing this paper, I thank the International Monetary Fund Research Department, the National University of Singapore Business School, the Reserve Bank of Australia, and the University of Valencia. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.