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The Effects of Cultural Differences on Bilateral Trade Patterns

Author

Listed:
  • Raymond J. MacDermott

    (Department of Economics and Business, VirginiaMilitary Institute, 331 Scott Shipp Hall, Lexington, VA 24450, USA)

  • Dekuwmini Mornah

    (Department of Economics and Business, VirginiaMilitary Institute, 331 Scott Shipp Hall, Lexington, VA 24450, USA)

Abstract

We argue that using the aggregate of the Euclidian distance of different dimensions of culture to measure the impact of culture on bilateral trade patterns as is conventional in the literature is flawed. Using recent innovations in gravity model estimations and adopting the GLOBE team dimensions of culture, we confirm that the aggregate measure of culture imposes arbitrary functional forms, wrongly assumes symmetry in the effect of culture on bilateral trade, generalizes the effect of culture on trade and lacks policy relevancy. Our novel approach also allows us to determine which aspects of culture promote trade and which aspects do not.

Suggested Citation

  • Raymond J. MacDermott & Dekuwmini Mornah, 2016. "The Effects of Cultural Differences on Bilateral Trade Patterns," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 16(4), pages 637-668, December.
    • Handle: RePEc:wsi:gejxxx:v:16:y:2016:i:04:n:gej-2015-0062
    DOI: 10.1515/GEJ-2015-0062
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    Keywords

    bilateral; trade; culture; gravity;
    All these keywords.

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