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Cultural Links, Firm Heterogeneity and the Intensive and Extensive Margins of International Trade

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  • Paulo Bastos
  • Joana Silva

Abstract

It is well known that cultural links between countries increase bilateral trade. In this paper we exploit Portuguese firm-level data on exports to 199 destinations to investigate the questions: How? Do cultural links increase the number of exporters, or the shipments per exporter? What is the role of firm heterogeneity? The results reveal that cultural links, measured by common language/colonial ties and emigrant communities, are significantly associated with a lower incidence of within-firm export zeros and with larger shipments per exporter. Furthermore, they show that the former of these relationships tends to be magnified by firm size, suggesting that firm heterogeneity is key in shaping the interplay between cultural links and the extensive margin of international trade.

Suggested Citation

  • Paulo Bastos & Joana Silva, 2008. "Cultural Links, Firm Heterogeneity and the Intensive and Extensive Margins of International Trade," Discussion Papers 08/30, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:08/30
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2008/08-30.pdf
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    References listed on IDEAS

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    Cited by:

    1. Cyrus Teresa L., 2012. "Cultural Distance and Bilateral Trade," Global Economy Journal, De Gruyter, vol. 12(4), pages 1-25, December.
    2. Ronald B. Davies & Arman Mazhikeyev, 2021. "The glass border: Gender and exporting in developing countries," The World Economy, Wiley Blackwell, vol. 44(4), pages 879-903, April.
    3. Yongwei Chen & Wei‐Min Hu & Radek Szulga & Buoyuan Xue, 2018. "Cultural Differences and Interprovincial Trade in China: Effect of Surname Distance and its Mechanisms," Pacific Economic Review, Wiley Blackwell, vol. 23(4), pages 609-631, October.

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