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Genetic distance, cultural differences, and the formation of regional trade agreements

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  • Benedikt Heid

    (School of Economics, University of Adelaide and CESifo)

  • Wenxi Lu

    (Department of Economics and Trade, School of Management, Harbin Institute of Technology)

Abstract

Genetic distance between countries’ populations has been shown to proxy cross-country differences in cultures and preferences. In a panel of 176 countries from 1970 to 2014, we find that higher genetic distance between two countries decreases their probability of having a trade agreement, even when controlling for geographic distance and other controls. The impact of cultural differences proxied by genetic distance is persistent over time and economically significant: while increasing the geographic distance between two countries by 1% decreases the probability of a regional trade agreement by 1.6%, increasing their genetic distance by 1% decreases the probability by 0.9%

Suggested Citation

  • Benedikt Heid & Wenxi Lu, 2020. "Genetic distance, cultural differences, and the formation of regional trade agreements," School of Economics and Public Policy Working Papers 2020-04, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2020-04
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2020-04.pdf
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    More about this item

    Keywords

    trade agreements; trade policy; genetic distance; cultural difference;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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