Applied Economics Letters
We introduce ‘cultural distance’ as a measure of the degree to which shared norms and values in one country differ from those in another country, and employ a modified gravity specification to examine whether such cultural differences affect the volume of trade flows. Employing data for US statelevel exports to the 75 trading partners for which measures of cultural distance can be constructed, we find that greater cultural differences between the United States and a trading partner reduces state-level exports to that country. This result holds for aggregate exports, cultural and noncultural products exports as well, but with significantly different magnitudes. Immigrants are found to exert a pro-export effect that partially offsets the trade-inhibiting effects of cultural distance.
White, R., & Tadesse, B. (2010). Cultural Distance as a Determinant of Bilateral Trade Flows: Do Immigrants Counter the Effect of Cultural Distance?. Applied Economics Letters, 17 (2) Retrieved from https://poetcommons.whittier.edu/econ/19