The impact of cultural factors on international trade: an empirical analysis

Ziad Ghaith () and Donald Wagner
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Ziad Ghaith: University of Prince Edward Island
Donald Wagner: University of Prince Edward Island

International Economics and Economic Policy, 2025, vol. 22, issue 3, No 10, 21 pages

Abstract: Abstract This study examined the influence of cultural context and linguistic proximity on bilateral trade using a modified gravity model. The analysis incorporated trade data from 117 countries, encompassing 6,623 bilateral trading relationships. Bilateral trade was modeled as a function of cultural context, linguistic proximity, and other relevant economic and geographic factors. The results suggested that linguistic proximity does not appear to have a statistically significant effect on bilateral trade when evaluating total trade. However, the findings support the notion that cultural context distance plays a role in promoting trade. Specifically, sharing the same cultural context was associated with reduced bilateral trade, whereas greater cultural context distance between trading partners appeared to enhance trade.

Keywords: International trade; Cultural context; Gravity model; Hofstede’s cultural dimensions (search for similar items in EconPapers)
JEL-codes: C55 F14 F17 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-025-00670-y

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