CULTURAL DISTANCE IN INTERNATIONAL TRADE: CONTRIBUTOR OR IMPEDIMENT?
Mariya Bobina, Mary Sully de Luque and Mikhail Grachev
The article aims at identifying and evaluating culture’s effects to predict bilateral trade flows by constructing cultural distance measures with data derived from the large-scale empirical cross-cultural study. The application of values-tied and practices-tied data across 57 countries at different points in time in international trade gravity models reveals positive predictors, but only the former is statistically significant. The country-level results display variance in cultural distance effects in trade and also show that cultural differences might contribute more to bilateral trade for less developed countries but impede it for more developed countries. By challenging the “polarity” interpretation of cultural distance, the article contributes to the scholarly discussion surrounding culture’s role in international trade by offering a more balanced view of cultural distance effects that may serve as both an inhibitor and facilitator, and by suggesting a “duality” explanation, one that has been largely overlooked.
international trade, cultural distance, gravity model