This study examines the causal relationship between international public relations expenditure and its economic returns at the country level. In order to overcome the limitations of previous studies that have attempted to quantify the outcomes of public relations efforts and investments using correlations, this study conducted a more rigorous causality test by measuring the relationship between data series using time-series analysis.

International public relations expenditure data were collected from the semi-annual reports of the Foreign Agency Registration Act (FARA), from 1996 to 2009. The economic outcomes analyzed include US imports from the client countries and US foreign direct investment toward the client countries. Four countries (Japan, Colombia, Belgium, and the Philippines) were selected to constitute the sample. Based on the results of the unit-root test and the co-integration test, the relationship was analyzed using three models of the Granger causality test: (1) the simple Autoregressive Distributed Lag Model, (2) the Vector Error Correction Model, and (3) the Toda and Yamamoto version of the Granger non-causality test.

The results show that past public relations expenditure holds power in forecasting the economic outcomes for Japan, Belgium, and the Philippines. This was not the case, however, for Colombia, whose historically strong economic and cultural ties with the US may have shifted the direction of causation from economic outcome to PR expenditure.