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Affinity and International Trade

Author

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  • Marcus Noland

    () (Peterson Institute for International Economics)

Abstract

This paper examines the impact of American public attitudes toward foreign countries on the volume of trade. The issue is whether popular attitudes, as elicited in these surveys, convey any information about trust, risk, or transactions costs beyond what can be explained through standard economic models. The results of this paper suggest that they do, with a one standard deviation increase in warmth of feeling associated with a 20 to 31 percent larger trade volume when evaluated at the sample means. These public attitudes are in turn correlated with indices of cultural affinity and political ideology. A one standard deviation increase in the democracy score is associated with a 5 to 7 percent increase in trade. There might be additional secondary effects if democratization was associated with an increased likelihood of the removal of sanctions or the initiation of preferential trade relations.

Suggested Citation

  • Marcus Noland, 2005. "Affinity and International Trade," Working Paper Series WP05-3, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp05-3
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    File URL: https://piie.com/publications/working-papers/affinity-and-international-trade
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    References listed on IDEAS

    as
    1. Portes, Richard & Rey, Helene, 2005. "The determinants of cross-border equity flows," Journal of International Economics, Elsevier, vol. 65(2), pages 269-296, March.
    2. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    3. Guinnane Timothy W., 2005. "Trust: A Concept Too Many," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 46(1), pages 77-92, June.
    4. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters,in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
    5. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
    6. Marcus Noland, 2005. "Popular Attitudes, Globalization and Risk," International Finance, Wiley Blackwell, vol. 8(2), pages 199-229, August.
    7. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1095-1131.
    8. Robert Z. Lawrence, 1993. "Japan's Different Trade Regime: An Analysis with Particular Reference to Seiretsu," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 3-19, Summer.
    9. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    10. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
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    Citations

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    Cited by:

    1. Michael Ferrantino, 2006. "Quantifying the Trade and Economic Effects of Non-Tariff Measures," OECD Trade Policy Papers 28, OECD Publishing.

    More about this item

    Keywords

    international trade; gravity model; trust; risk;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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