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Genetic distance, cultural differences, and the formation of regional trade agreements

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  • Benedikt Heid

    (University of Adelaide and CESifo)

  • Wenxi Lu

    (Harbin Institute of Technology)

Abstract

Genetic distance between countries’ populations has been shown to proxy cross-country differences in cultures and preferences. In an unbalanced panel of 133 countries from 1970 to 2012, the study finds that higher genetic distance between two countries decreases their probability of having a trade agreement, even when controlling for geographic distance and other controls. The impact of cultural differences proxied by genetic distance is persistent over time and economically significant: While increasing the geographic distance between two countries by 1% decreases the probability of a regional trade agreement by 0.11% points, increasing their genetic distance by 1% decreases the probability by 0.06% points.

Suggested Citation

  • Benedikt Heid & Wenxi Lu, 2022. "Genetic distance, cultural differences, and the formation of regional trade agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 1-23, February.
    • Handle: RePEc:spr:weltar:v:158:y:2022:i:1:d:10.1007_s10290-021-00410-9
    DOI: 10.1007/s10290-021-00410-9
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    Cited by:

    1. Jason Query & Jon C. Thompson, 2024. "Cultural Distance and International Trade," Open Economies Review, Springer, vol. 35(2), pages 283-300, April.

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    More about this item

    Keywords

    Trade agreements; Trade policy; Trade negotiations; Genetic distance; Cultural differences;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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