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Affinity and International Trade

  • Marcus Noland


    (Peterson Institute for International Economics)

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.

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Paper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP05-3.

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Date of creation: Jun 2005
Date of revision:
Handle: RePEc:iie:wpaper:wp05-3
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  1. Rose, Andrew K, 2002. "Do We Really Know that the WTO Increases Trade?," CEPR Discussion Papers 3538, C.E.P.R. Discussion Papers.
  2. 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.
  3. Marcus Noland, 2005. "Popular Attitudes, Globalization and Risk," International Finance, Wiley Blackwell, vol. 8(2), pages 199-229, 08.
  4. 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.
  5. Richard Portes & Hélène Rey, 2001. "The Determinants of Cross-Border Equity Flows," DELTA Working Papers 2001-08, DELTA (Ecole normale supérieure).
  6. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "Cultural Biases in Economic Exchange," NBER Working Papers 11005, National Bureau of Economic Research, Inc.
  7. James E. Rauch & Vitor Trindade, 1999. "Ethnic Chinese Networks in International Trade," NBER Working Papers 7189, National Bureau of Economic Research, Inc.
  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. Guinnane Timothy W., 2005. "Trust: A Concept Too Many," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 46(1), pages 77-92, June.
  10. Pierre-Philippe Combes & Miren Lafourcade & Thierry Mayer, 2005. "The Trade Creating Effects of Business and Social Networks: Evidence from France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00268768, HAL.
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