Cultural Differences and Bilateral Trade: An Empirical Study Based on Industrial Data from OECD and BRIICS Countries

Zao Sun, Yangzi Li, Pang Paul Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

This study extends the cross-sectional gravity function in the Eaton and Kortum model to a panel-data model based on 36 OECD and six BRIICS countries from 2010 to 2018 and introduce heterogeneous technology to measure the competitiveness of each country by interaction fixed effects. The results illustrate that the total cultural distance between countries significantly impedes bilateral trade, as it increases trade costs. The conclusions are robust with instrumental variables, alternative measurement of cultural differences, and extended time window estimation. And the effects present heterogeneity in sub-dimensions of cultural distance and sub-industries.
Original languageEnglish
JournalEmerging Markets Finance and Trade
DOIs
Publication statusPublished - 26 Apr 2023

Keywords

  • BRIICS countries
  • Bilateral trade
  • Eaton and Kortum model
  • OECD countries
  • cultural distances

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Finance

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