"Why do we even have embassies?," I once asked, back when it was suggested that I enroll my monolingual self in the Foreign Service. "Can't our diplomats just, um, videoconference?" Turns out this wasn't half wrong. Here's what Andrew K. Rose of CEPR has to say on whether embassies and consulates actually serve a real purpose any more:

As communication costs fall, foreign embassies and consulates have lost much of their role in decision-making and information-gathering. Accordingly, foreign services are increasingly marketing themselves as agents of export promotion. I investigate whether exports are in fact systematically associated with diplomatic representation abroad. I use a recent cross-section of data covering 22 large exporters and 200 import destinations. Bilateral exports rise by approximately 6-10% for each additional consulate abroad, controlling for a host of other features including reverse causality. The effect varies by exporter, and is non-linear; consulates have smaller effects than the creation of an embassy.

Now of course, embassies don't just do stuff that can be handled via internet searches or videoconferencing. They also deal with passport and visa issues, occasionally are called upon to bail twentysomething backpackers with hash stuffed in their sneakers out of Turkish prison, and other pressing duties, but as Rose says, that doesn't "justify the expense and prestige of a Foreign Service." No, instead diplomats have become nation-to-nation salesmen of sorts, "promoting trade and investment opportunities overseas." So there. (But why can't this all be done by videoconference and slick promotional DVDs? Hmm? Someday...)