Power of Haas Ideas

The Superstar Effect

The economic value of “soft power”

Pop culture assets like Star Wars, Taylor Swift, and the NBA not only contribute to boosting American appeal, they also increase demand for American goods abroad. Economists call this “soft power,” the ability to attract and positively influence others.

Even though countries tend to wield “hard power” by flexing their economic or military strength, a new study by Prof. Andrew Rose found that countries admired for their soft power tend to sell more exports globally.

“The soft power effect has a very tangible commercial payoff,” says Rose. “Germany is a much-admired country and an export powerhouse; North Korea and Iran are pariah states and both find it difficult to export goods.”

In his study, Rose found that between 2006 and 2013, a 1 percent net increase in soft power raised exports by about 0.8 percent, proving that the monetary return to soft power can be immense.

Rose incorporated “fixed effects” like population, GDP, and political elections into his econometric model and measured soft power with the annual BBC World Service/GlobeScan poll, which asks people from 46 countries how they perceive the influence of 17 other countries.

The U.S. is typically viewed as possessing the most soft power, though perceptions vary. In 2013, only 17 percent of Russians considered American influence mainly positive, compared to 82 percent of Ghanaians. French positive perception of the U.S. increased from 25 percent in 2006 to 52 percent in 2013.

Over the same seven years, positive views of China decreased substantially in Spain and Germany while remaining constant in Indonesia and Kenya. Negative views toward China increased the most in Russia and Brazil.

U.S. and Chinese trade were but two examples in which exports correlated with their respective degrees of soft power.

The most negatively viewed countries—Iran, North Korea, Pakistan, and Israel—saw fewer exports. —PT

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Prof. Andrew Rose Prof. Andrew Rose