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Purpose – This paper seeks to analyze empirically the net effect of trade openness on “economic culture”, measured by indicators of trust, respect, level of self-determination, and obedience. Openness to international trade means that societies are more likely to be exposed to alternative attitudes, beliefs, ideas, and values leading to a Schumpeterian process of creative destruction whereby culture is destroyed on some margins and enhanced on others. Design/methodology/approach – Using data on trade openness from Quinn and Sachs and Warner, the paper empirically evaluates the impact of trade openness on economic culture. The paper's measure of culture is taken from Tabellini and Williamson and Kerekes, where data from the World Values Survey is aggregated to create a culture variable. The paper isolates the impact of trade policies on economic culture through a variety of empirical strategies including both panel and cross sectional analysis. Findings – The central finding of the study is that a society's openness to international trade generates, on net, positive effects on economic culture. The more open a country is to trade, the more likely it is to possess culture conducive to economic interaction and entrepreneurship. Originality/value – This paper contributes to the existing literature by studying the impact of trade openness on culture. While previous studies have asked “Does culture affect economic outcomes?”, this paper explores the answer to the related question, “How does openness to trade affect culture?”

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Author Info

  • Christopher J. Coyne
  • Claudia R. Williamson

Abstract

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Journal of Entrepreneurship and Public Policy.

Volume (Year): 1 (2012)
Issue (Month): 4 (April)
Pages: 22-49

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Handle: RePEc:eme:jepppp:v:1:y:2012:i:4:p:22-49

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Related research

Keywords: Development; Economic growth; Entrepreneurial action; Globalization; International trade;

References

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  1. Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
  2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
  3. Claudia Williamson, 2009. "Informal institutions rule: institutional arrangements and economic performance," Public Choice, Springer, vol. 139(3), pages 371-387, June.
  4. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal Of Fortune: Geography And Institutions In The Making Of The Modern World Income Distribution," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1231-1294, November.
  5. Guido Tabellini, 2008. "Presidential Address Institutions and Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 255-294, 04-05.
  6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
  7. Guido Tabellini, 2007. "Culture and Institutions: Economic Development in the Regions of Europe," Levine's Working Paper Archive 321307000000000974, David K. Levine.
  8. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2006. "Does Culture Affect Economic Outcomes?," CEPR Discussion Papers 5505, C.E.P.R. Discussion Papers.
  9. Dennis P. Quinn & A. Maria Toyoda, 2008. "Does Capital Account Liberalization Lead to�Growth?," Review of Financial Studies, Society for Financial Studies, vol. 21(3), pages 1403-1449, May.
  10. Yanikkaya, Halit, 2003. "Trade openness and economic growth: a cross-country empirical investigation," Journal of Development Economics, Elsevier, vol. 72(1), pages 57-89, October.
  11. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: a Skeptic's Guide to the Cross-National Evidence," Working Papers 9912, Economic Research Forum, revised Apr 1999.
  12. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change
    [Understanding the Process of Economic Change]
    ," Introductory Chapters, Princeton University Press.
  13. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  14. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  15. Claudia R. Williamson & Carrie B. Kerekes, 2011. "Securing Private Property: Formal versus Informal Institutions," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 537 - 572.
  16. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," NBER Working Papers 10568, National Bureau of Economic Research, Inc.
  17. Patrick Francois & Jan Zabojnik, 2005. "Trust, Social Capital, and Economic Development," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 51-94, 03.
  18. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
  19. Licht, Amir N. & Goldschmidt, Chanan & Schwartz, Shalom H., 2007. "Culture rules: The foundations of the rule of law and other norms of governance," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 659-688, December.
  20. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
  21. Durham, J Benson, 1999. " Economic Growth and Political Regimes," Journal of Economic Growth, Springer, vol. 4(1), pages 81-111, March.
  22. Schneider, Friedrich & Wagner, Alexander F, 2001. "Institutions of Conflict Management and Economic Growth in the European Union," Kyklos, Wiley Blackwell, vol. 54(4), pages 509-31.
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