Globalization has increased both the heterogeneity and the stakes of bilateral economic relationships. Drawing on recent macroeconomic and microdata studies, Peter A.G. van Bergeijk estimates the impact of market failures and related border effects, exploring under which conditions these can be solved by state visits, export promotion and embassies. The book presents an overview of the general aspects of trade uncertainty, a central element in the analysis of economic diplomacy, illustrating that some instruments, such as sanctions (both positive and negative), increase trade uncertainty, whilst others - multilateral trade policy, for instance - aim to reduce this uncertainty. Commercial policy and bilateral economic diplomacy are explored, and economic sanctions analysed. An extensive review of the literature and empirical investigations of 161 sanctions and the commercial relationships of 37 countries provide topical and empirical perspectives on how international diplomacy may both be a cost and a benefit of the key drivers of productivity growth. Finally, policy conclusions are drawn, and a future research agenda presented.

This timely, state-of-the-art treatment of economic diplomacy will be of enormous interest to students, researchers, and academics focussing on international political economy, international economics and public policy. Policy makers will also find much to engage them within this book.