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Abstract
Possible reasons for visits to foreign nations by heads of state include the expansion of foreign markets for exports and the attraction of foreign direct investment. These two reasons are investigated in the two chapters that comprise this dissertation. The first chapter explores the role that a head of state may have in promoting exports and how it affects the decision of visiting any given foreign country under the presence of legacy preferences. A theoretical model is proposed and empirically estimated using the data for President Lula's administration in Brazil from 2003 to 2006. The choice of this administration for empirical investigation is particularly interesting since it was marked by many presidential foreign visits that appeared to have both an export promotion component and legacy preferences. The results indicate that the export promotion component was important in explaining the export performance during Lula's administration and that there was a strong legacy intent in the probability of having a visit to a foreign nation. The second chapter explores the role that the relevance of a delegation led by a head of state, visiting a foreign nation, may play in signaling the competitiveness of a country interested in attracting foreign direct investment for the export sector. The analysis shows that the signaling effect can be so important that the choice of a delegation may affect the probability of attracting foreign direct investment even if the intrinsic usefulness of delegation members is zero. There is an indication that the predicted correlation between the relevance of delegations and world salaries can be observed for President Lula's administration.
