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Bilateral trade of cultural goods

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Abstract

International trade flows of cultural goods have grown rapidly over the last decades and their liberalization will be an important issue of future multilateral trade negotiations. In this paper, we focus on bilateral trade in cultural goods and investigate its determinants. Furthermore, we use trade in cultural goods as a proxy for countries’ cultural proximity and study if countries with proximate cultural tastes have more intense bilateral exchanges. Our estimations show a positive and significant influence of cultural flows on overall trade, suggesting that regulations fostering domestic cultural creation might have impacts going beyond what is generally expected.

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Notes

  1. Household expenditures on recreation and culture include purchases of audio-visual, photographic and computer equipment; CDs and DVDs; musical instruments; camper vans; caravans; sports equipment; toys; domestic pets and related products; gardening tools and plants; newspapers; tickets to sporting matches, cinemas and theatres; and spending on gambling (including lottery tickets) less any winnings.

  2. Cultural goods included in this (UNESCO) definition are printed matter, literature, music, visual arts, cinema, photography, radio, television, games and sporting goods.

  3. http://portal.unesco.org/culture/.

  4. François and van Ypersele (2002) provide academic justification for this view.

  5. Close to our approach is the work by Dreher et al. (2008). The authors use trade in books as a measure of countries’ cultural proximity and investigate the effects of several dimensions of globalization on economics in a time-series cross-section context. Felbermayr and Toubal (2009) is another very recent paper using bilateral votes in the Eurovision song contest to measure changes in bilateral cultural affinity over time.

  6. For a very detailed analysis of production and consumption of arts, see Throsby (1994). Here, we focus only on international trade in cultural goods.

  7. This habit formation effect is obviously not specific to cultural goods but can also be observed for goods such as alcohol, tobacco, etc., as well as for goods that may have some origin-country feature (such as wine from Tuscany, French cheese, …).

  8. See, e.g. Boisso and Ferrantino (1997), Melitz (2008), Rose (2000), Eichengreen and Irwin (1998), Wagner et al. (2002), Guiso et al. (2009) and for a review of this literature Disdier and Mayer (2007).

  9. The debate on whether genetic distance is a legitimate proxy for cultural distance is still open. Focusing on the diffusion of development, Spolaore and Wacziarg (2009) argue that genetic distance provides an ideal summary of divergence in slowly changing genealogically transmitted characteristics, including culturally transmitted traits (habits, customs, etc.) and find a positive and significant relationship between measures of genetic distance and cross-country income differences. Guiso et al. (2009) also dispute the critique of genetic distance by Giuliano et al. (2006).

  10. Our analysis focuses only on goods and does not study cultural services.

  11. http://www.cepii.fr/anglaisgraph/bdd/baci.htm.

  12. Alternative theoretical foundations of the gravity equations include very different assumptions: perfect competition with technology differences as in Eaton and Kortum (2002), monopolistic competition with different functional forms as in Melitz and Ottaviano (2008), or heterogenous firms operating in a Dixit–Stiglitz environment as in Chaney (2008). All of those however yield a strictly equivalent estimable specification for our purposes.

  13. http://www.cepii.fr/anglaisgraph/bdd/distances.htm.

  14. When this equation is estimated by a PPML estimator, the left-hand-side term is taken in levels.

  15. Recent years are available on the web: http://www.uis.unesco.org/. Previous years are taken from the statistical yearbooks of UNESCO.

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Acknowledgments

We especially appreciate the suggestions of Harmen Lehment and an anonymous referee. We thank Paola Conconi, Victor Ginsburgh, Nicolas Maystre, André Sapir, and participants at University Paris 1 seminar, RIEF Doctoral Meeting 2006, ETSG 2006 and AFSE 2006 for helpful suggestions. We acknowledge financial support from the Centre for Economic Policy Research (Research Training Network: “Trade, Industrialization and Development”) and from the French Ministry of Culture (Contract: DDAI/DEPS E0514).

Disclaimer

This paper represents the opinions of the authors. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members.

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Authors and Affiliations

  1. INRA, UMR Economie Publique INRA-AgroParisTech, 16 rue Claude Bernard, 75231, Paris Cedex 05, France

    Anne-Célia Disdier

  2. Université de Genève, Geneva, Switzerland

    Silvio H. T. Tai

  3. Paris School of Economics, Université Paris I, Paris, France

    Lionel Fontagné

  4. CEPII, Paris, France

    Lionel Fontagné & Thierry Mayer

  5. Sciences Po, Paris, France

    Thierry Mayer

  6. CEPR, London, UK

    Thierry Mayer

Authors
  1. Anne-Célia Disdier
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  2. Silvio H. T. Tai
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  3. Lionel Fontagné
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  4. Thierry Mayer
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Correspondence to Anne-Célia Disdier.

Appendix: Depreciation of the past consumption stock of cultural goods

Appendix: Depreciation of the past consumption stock of cultural goods

The addictive stock of past consumption is defined as follows (Chaloupka 1991):

$$ A(t) = \sum\limits_{i = 0}^{t - 1} {(1 - \delta )^{t - 1 - i}C(i)} , $$

where δ is the constant rate of depreciation of the addictive stock over time and C(t) the consumption in year t. This equation can be rewritten as:

$$ A(t) = \sum\limits_{i = 0}^{t - 1} {C(i)D(i) = t\overline{CD} + t\text{cov} (C(i)D(i))} , $$

where \( D(i) = (1 - \delta )^{t - 1 - i} \) and \( \overline{CD} \) is the product of the mean value of D and the mean consumption. The covariance is assumed to be relatively small and is ignored.

Following Chaloupka (1991), we assume high depreciation rates considering that withdrawal effects shortly disappear after consumption cessation. If rates of depreciation are between 60 and 90%, remaining consumption effects last between 2 and 5 years. By comparison if δ = 20%, remaining consumption effects last more than 20 years. Results are described in Table 6. In this table, we normalize initial consumption to 1 and consider that the effects persist until remaining consumption represents only 1% of the initial one. Moreover, past consumption stock tends to stabilize after some years. We consider that the stock is stabilized if its variation from one year to another is less than 5%. If δ is set to 60%, the stock variation is equal to 4.1% between the third and fourth years. Therefore, in such case, the number of years before stabilization is 4. Similarly, if δ = 70%, the stock variation is 1.9% between the third and fourth years and the number of years before stabilization is 4. If δ = 80%, the variation is 3.3% between the second and third years and we conclude that the stock is stabilized after 3 years. In our study, we set δ to 0.7.

Table 6 Depreciation rate and consumption effects
Full size table

Using these depreciation rates, we estimate gravity equations for the aggregate value of cultural goods imports. The stock of past imports is included among explanatory variables. Coefficient estimates on this stock are reported in Table 6. These estimates are not significantly affected by the value of the depreciation rate. Thus, the choice of a depreciation rate depends essentially on the expected time of influence of past consumption.

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Disdier, AC., Tai, S.H.T., Fontagné, L. et al. Bilateral trade of cultural goods. Rev World Econ 145, 575–595 (2010). https://doi.org/10.1007/s10290-009-0030-5

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