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Genetic distance, cultural differences, and the formation of regional trade agreements

Benedikt Heid () and Wenxi Lu

No 2020-04, School of Economics Working Papers from University of Adelaide, School of Economics

Abstract: Genetic distance between countries’ populations has been shown to proxy cross-country differences in cultures and preferences. In a panel of 176 countries from 1970 to 2014, we find that higher genetic distance between two countries decreases their probability of having a trade agreement, even when controlling for geographic distance and other controls. The impact of cultural differences proxied by genetic distance is persistent over time and economically significant: while increasing the geographic distance between two countries by 1% decreases the probability of a regional trade agreement by 1.6%, increasing their genetic distance by 1% decreases the probability by 0.9%

Keywords: trade agreements; trade policy; genetic distance; cultural difference (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 Z10 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-int and nep-soc
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