The Effects of Cultural Differences on Bilateral Trade Patterns

MacDermott Raymond J. () and Dekuwmini Mornah
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MacDermott Raymond J.: Department of Economics and Business, Virginia Military Institute, 331 Scott Shipp Hall, Lexington, VA 24450, USA

Global Economy Journal, 2016, vol. 16, issue 4, 637-668

Abstract: We argue that using the aggregate of the Euclidian distance of different dimensions of culture to measure the impact of culture on bilateral trade patterns as is conventional in the literature is flawed. Using recent innovations in gravity model estimations and adopting the GLOBE team dimensions of culture, we confirm that the aggregate measure of culture imposes arbitrary functional forms, wrongly assumes symmetry in the effect of culture on bilateral trade, generalizes the effect of culture on trade and lacks policy relevancy. Our novel approach also allows us to determine which aspects of culture promote trade and which aspects do not.

Keywords: bilateral; trade; culture; gravity (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/gej-2015-0062

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