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Intercultural Economic Analysis pp 77–102Cite as

Intercultural Economic Influences

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Abstract

Given the markedly differing attitudes as well as cultural values between different cultural groups of people, the adoption of a common standard is unlikely to prove effective. However “cultural dissimilarity” may also generate “economic complementarities” that will in turn exert positive influences on foreign trade. As a result the final output of the cultural influences should be nonlinear, subjected to various conditions concerned. In this chapter, cultural influences on international trade are found to be more significant for the post-Cold War era than in the Cold War era. Our empirical results also provide evidence supporting the presumption that high-income trade partners will be less sensitive to the measures of cultural dissimilarity than low-income trade partners between which cultural dissimilarity leads to barriers to international trade. The treatment of linguistic and religious factors as continuous variables in this chapter has improved past studies in which “language” was treated as one or more dummy variables and “religion” was ignored.

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Notes

  1. 1.

    Linnemann (1966) and Frankel et al. (1997a) have estimated the effects of both GDP and GNP on trade, but no significant difference is found.

  2. 2.

    For example, Linnemann (1966) puts the estimated coefficient as −0.77, Brada and Mendez (1983) and Oguledo and MacPhee (1994) as 0.76, Bikker (1987) as −0.90 to −1.1, Mansfield and Bronson (1997) as −0.51 to −0.69 (for 1950–90), and Rauch (1999) as −0.62 to −0.70 (1970–90).

  3. 3.

    See, for example, Leontief (1956), Kravis (1956a, 1956b) Keesing (1966), Kenen (1965), Baldwin (1971), Branson and Monoyios (1977), Leamer (1980, 1984, 1993), Stern and Maskus (1981), Bowen, Leamer and Sveikauskas (1987), and Salvatore and Barazesh (1990).

  4. 4.

    Frankel et al. (1997a, p. 58). Of the many relevant works, some of the more important are Grossman and Helpman (1989, 1991), Rivera-Batiz and Romer (1991) and, for further references on the connections between trade and growth, Frankel et al. (1995).

  5. 5.

    Selected literature on the intraindustry trade can be found in Grubel and Lloyd (1975), Krugman (1980), Lancaster (1980), Greenaway and Milner (1986), Vona (1990), and Leamer (1993).

  6. 6.

    We define “intercultural trade” as “trade between countries or regions differing in one or more cultural elements.” However, since no countries have exactly same cultural elements, “intercultural trade” and “international trade” are not different from each other.

  7. 7.

    Data source: IMF (various issues).

  8. 8.

    As a matter of fact, a negative coefficient on per capita GDP sometimes may be found in gravity model on trade for homogeneous products if they are more agricultural and rich countries tend to have managed trade in agricultural products.

  9. 9.

    The application of the gravity model in regional science and economic geography can be traced back to as far as the 1940s (see, for example, Zipf 1946; Stewart 1948; Isard 1949).

  10. 10.

    Note that if there are a significant number of zero values in the pair-wise trade, then Tobit regressions techniques should be used. However, in this research, the number of country-pairs identified by “TRADE = 0” (that is, there is no trade for a country pair) is quite small.

  11. 11.

    In fact, there still exist some amount of “illegal” (or unofficial) trade for those economies that are officially reporting no bilateral trade flows.

  12. 12.

    For example, Frankel et al. (1997a, p. 56) use Chicago for the major city of the United States rather than Washington, DC, and Shanghai for the major city of China rather than Beijing.

  13. 13.

    Technically, the data of more years should be considered to represent each period. But this would increase the difficulties in the collection and calculation of cultural data.

  14. 14.

    Of course, one can also include more countries. But this would increase the work of data processing significantly.

  15. 15.

    In the Britannica Book (1996), atheism and nonreligion were each treated as a “religious affiliation” in USA and China, but in other countries such as Austria, Czech Republic, North Korea, etc., they were grouped as a single religious group.

  16. 16.

    Among the past literature (see, for example, Linnemann 1966; Brada and Mendez 1983; Oguledo and MacPhee 1994; Bikker 1987; and Mansfield and Bronson 1995) relating to the determinants of international trade (in logarithmic form), the statistically significant coefficients on the log of distance have ranged between −0.51 and −1.50, which demonstrate the decreases (in percentage) in international trade as a result of a 1.0% increase in distance. Specifically, Linnemann (1966) estimates the coefficient as −0.77, Brada and Mendez (1983) and Oguledo and MacPhee (1994) as −0.76, Bikker (1987) as −0.90 to −1.1, and Mansfield and Bronson (1997) as −0.51 to −0.69 (for 1950–1990).

  17. 17.

    Such as the mountains of Altai with Russia and Mongolia, Tian-Shan with Kazakhstan and Kyrgyzstan, and Himalayas with Bhutan, India, and Nepal, and so on.

  18. 18.

    The three breakpoint values are obtained by letting the first-order differentials of the dependent variables (ln(TRADE ij + 1), ln(EXPORT ij + 1) and ln(IMPORT ij + 1)) with respect to RELIGION be zero, respectively.

  19. 19.

    For example, Linder (1961) predicts that countries with similar levels of per capita income will tend to have similar preferences with somewhat differentiated marketable goods and thus will trade more with each other.

  20. 20.

    Before deriving its first-order partial differential with respective to ln(GNPPC j ), the variable ln(GNP i GNP j ) can be decomposed into ln(POP i POP j ) + ln(GNPPC i ) + ln(GNPPC j ), where POP i and POP j are the sizes of population of the ith and jth countries, respectively.

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  1. Regional Science Association of China at Peking University, Beijing, China

    Rongxing Guo

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Guo, R. (2009). Intercultural Economic Influences. In: Intercultural Economic Analysis. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0849-0_4

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