Affinity and International Trade

Marcus Noland

No WP05-3, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper examines the impact of American public attitudes toward foreign countries on the volume of trade. The issue is whether popular attitudes, as elicited in these surveys, convey any information about trust, risk, or transactions costs beyond what can be explained through standard economic models. The results of this paper suggest that they do, with a one standard deviation increase in warmth of feeling associated with a 20 to 31 percent larger trade volume when evaluated at the sample means. These public attitudes are in turn correlated with indices of cultural affinity and political ideology. A one standard deviation increase in the democracy score is associated with a 5 to 7 percent increase in trade. There might be additional secondary effects if democratization was associated with an increased likelihood of the removal of sanctions or the initiation of preferential trade relations.

Keywords: international trade; gravity model; trust; risk (search for similar items in EconPapers)
JEL-codes: F1 F2 Z13 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-int and nep-pol
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:iie:wpaper:wp05-3

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