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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?”

Contents:

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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Web page: http://www.emeraldinsight.com

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Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
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Related research

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

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
  2. Guido Tabellini, 2005. "Culture and Institutions: Economic Development in the Regions of Europe," CESifo Working Paper Series 1492, CESifo Group Munich.
  3. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  4. 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.
  5. 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.
  6. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2006. "Does Culture Affect Economic Outcomes?," CEPR Discussion Papers 5505, C.E.P.R. Discussion Papers.
  7. 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.
  8. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
  9. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
  10. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change
    [Understanding the Process of Economic Change]
    ," Introductory Chapters, Princeton University Press.
  11. Durham, J Benson, 1999. " Economic Growth and Political Regimes," Journal of Economic Growth, Springer, vol. 4(1), pages 81-111, March.
  12. Amir N. Licht & Chanan Goldschmidt & Shalom H. Schwartz, 2003. "Culture Rules: The Foundations of the Rule of Law and Other Norms of Governance," William Davidson Institute Working Papers Series 2003-605, William Davidson Institute at the University of Michigan.
  13. 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.
  14. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  15. 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.
  16. Claudia Williamson, 2009. "Informal institutions rule: institutional arrangements and economic performance," Public Choice, Springer, vol. 139(3), pages 371-387, June.
  17. 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.
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