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Thursday, May 25, 2017

"You're right, Melania." "Off course, dahlink. Hold still, let me staple your hair."

How reputation affects trade

We were amazed at what we found.

Each ranking drop in a country’s reputation is associated with a decrease in export volume of 2 percent. As an illustrative example, if the U.S. were to drop one reputational rung among Canadians, we would expect – all other things equal – a corresponding 2 percent decrease in exports to Canada. If we apply the results to 2016 exports, that would mean a potential loss of more than US$5 billion.

From another perspective, the effect is roughly equivalent to an importing country raising tariffs by 3 percent. For a large exporter like the United States (about $1.5 trillion in exported goods per year), a uniform drop in reputation could put tens of billions in manufacturing exports in jeopardy.

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