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The impact of cultural factors on international trade: an empirical analysis

Author

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  • Ziad Ghaith

    (University of Prince Edward Island)

  • Donald Wagner

    (University of Prince Edward Island)

Abstract

This study examined the influence of cultural context and linguistic proximity on bilateral trade using a modified gravity model. The analysis incorporated trade data from 117 countries, encompassing 6,623 bilateral trading relationships. Bilateral trade was modeled as a function of cultural context, linguistic proximity, and other relevant economic and geographic factors. The results suggested that linguistic proximity does not appear to have a statistically significant effect on bilateral trade when evaluating total trade. However, the findings support the notion that cultural context distance plays a role in promoting trade. Specifically, sharing the same cultural context was associated with reduced bilateral trade, whereas greater cultural context distance between trading partners appeared to enhance trade.

Suggested Citation

  • Ziad Ghaith & Donald Wagner, 2025. "The impact of cultural factors on international trade: an empirical analysis," International Economics and Economic Policy, Springer, vol. 22(3), pages 1-21, July.
    • Handle: RePEc:kap:iecepo:v:22:y:2025:i:3:d:10.1007_s10368-025-00670-y
    DOI: 10.1007/s10368-025-00670-y
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    References listed on IDEAS

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    More about this item

    Keywords

    International trade; Cultural context; Gravity model; Hofstede’s cultural dimensions;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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