IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-00641280.html
   My bibliography  Save this paper

Cultural Proximity and Trade

Author

Listed:
  • Gabriel Felbermayr

    (CESifo - CESifo)

  • Farid Toubal

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Cultural proximity is an important determinant of bilateral trade volumes. However, empirical quantification and testing are difficult due to the elusiveness of the concept and lack of observability. This paper draws on bilateral score data from the Eurovision Song Contest, a very popular pan-European television show, to construct a measure of cultural proximity which varies over time and within country pairs, and that correlates strongly with conventional indicators. Within the framework of a theory-grounded gravity model, we show that our measure positively affects trade volumes even if controlling for standard measures of cultural proximity and bilateral fixed effects.

Suggested Citation

  • Gabriel Felbermayr & Farid Toubal, 2010. "Cultural Proximity and Trade," Post-Print halshs-00641280, HAL.
    • Handle: RePEc:hal:journl:halshs-00641280
    DOI: 10.1016/j.euroecorev.2009.06.009
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00641280
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-00641280/document
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.euroecorev.2009.06.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Claudia M. Buch & Jörn Kleinert, 2008. "Exchange Rates and FDI: Goods versus Capital Market Frictions," The World Economy, Wiley Blackwell, vol. 31(9), pages 1185-1207, September.
    2. Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio & Wacziarg, Romain, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-194, June.
    3. repec:hal:spmain:info:hdl:2441/10183 is not listed on IDEAS
    4. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    5. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    6. Guido Tabellini, 2008. "Presidential Address Institutions and Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 255-294, 04-05.
    7. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    8. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    9. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 469-529.
    10. Schnabl, Gunther, 2003. "China: a stabilizing or deflationary influence in East Asia?The problem of conflicted virtue," Tübinger Diskussionsbeiträge 263, University of Tübingen, School of Business and Economics.
    11. Hager, Svenja & Schöbel, Rainer, 2006. "Deriving the dependence structure of portfolio credit derivatives using evolutionary algorithms," Tübinger Diskussionsbeiträge 300, University of Tübingen, School of Business and Economics.
    12. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    13. Sofronis Clerides & Thanasis Stengos, 2012. "Love thy Neighbour, Love Thy Kin: Strategy and Bias in the Eurovision Song Contest," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 15(1), pages 22-44, Summer.
    14. Ronald McKinnon & Gunther Schnabl, 2006. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Chapters, in: Volbert Alexander & Hans-Helmut Kotz (ed.), Global Divergence in Trade, Money and Policy, chapter 3, pages 45-71, Edward Elgar Publishing.
    15. Neubecker, Leslie & Stadler, Manfred, 2003. "In hunt for size: Merger formation in the oil industry," Tübinger Diskussionsbeiträge 258, University of Tübingen, School of Business and Economics.
    16. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, April.
    17. Marco Haan & S. Dijkstra & Peter Dijkstra, 2005. "Expert Judgment Versus Public Opinion – Evidence from the Eurovision Song Contest," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(1), pages 59-78, February.
    18. Schüle, Tobias, 2006. "Forbearance lending and soft budget constraints in a model of multiple heterogeneous bank financing," Tübinger Diskussionsbeiträge 303, University of Tübingen, School of Business and Economics.
    19. Victor Ginsburgh, 2005. "Languages, Genes, and Cultures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(1), pages 1-17, February.
    20. Koepke, Nikola & Baten, Joerg, 2005. "The biological standard of living in Europe during the last two millennia," European Review of Economic History, Cambridge University Press, vol. 9(1), pages 61-95, April.
    21. Felbermayr, Gabriel J. & Toubal, Farid, 2010. "Cultural proximity and trade," European Economic Review, Elsevier, vol. 54(2), pages 279-293, February.
    22. Gunther Schnabl, 2004. "De jure versus de facto Exchange Rate Stabilization in Central and Eastern Europe," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 59(02), pages 171-190, June.
    23. Pitterle, Ingo & Steffen, Dirk, 2004. "Welfare Effects of Fiscal Policy under Alternative Exchange Rate Regimes : The Role of the Scale Variable of Money Demand," Tübinger Diskussionsbeiträge 284, University of Tübingen, School of Business and Economics.
    24. Ginsburgh, Victor & Noury, Abdul G., 2008. "The Eurovision Song Contest. Is voting political or cultural?," European Journal of Political Economy, Elsevier, vol. 24(1), pages 41-52, March.
    25. Schanz, Sebastian, 2004. "Die Auswirkung alternativer Gewinnverwendung von Kapitalgesellschaften - im Rahmen des Halbeinkünfteverfahrens - auf die Vermögenspositionen Residualanspruchsberechtigter," Tübinger Diskussionsbeiträge 279, University of Tübingen, School of Business and Economics.
    26. Rostek, Stefan & Schöbel, Rainer, 2006. "Risk preference based option pricing in a fractional Brownian market," Tübinger Diskussionsbeiträge 299, University of Tübingen, School of Business and Economics.
    27. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    28. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
    29. Blum, Bernardo S. & Goldfarb, Avi, 2006. "Does the internet defy the law of gravity?," Journal of International Economics, Elsevier, vol. 70(2), pages 384-405, December.
    30. Zaby, Alexandra K., 2005. "Losing the lead: Patents and the disclosure requirement," Tübinger Diskussionsbeiträge 296, University of Tübingen, School of Business and Economics.
    31. Grupp, Hariolf & Stadler, Manfred, 2004. "Technological Progress and Market Growth : An Empirical Study Based on the Quality-Ladder Approach," Tübinger Diskussionsbeiträge 281, University of Tübingen, School of Business and Economics.
    32. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
    33. Thaut, Michael, 2003. "Die individuelle Vorteilhaftigkeit der privaten Rentenversicherung: Steuervorteile, Lebenserwartung und Stornorisiken," Tübinger Diskussionsbeiträge 264, University of Tübingen, School of Business and Economics.
    34. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2003. "A generalized design for bilateral trade flow models," Economics Letters, Elsevier, vol. 80(3), pages 391-397, September.
    35. Huang, Rocco R., 2007. "Distance and trade: Disentangling unfamiliarity effects and transport cost effects," European Economic Review, Elsevier, vol. 51(1), pages 161-181, January.
    36. Giuliano, Paola & Spilimbergo, Antonio & Tonon, Giovanni, 2006. "Genetic, Cultural and Geographical Distances," IZA Discussion Papers 2229, Institute of Labor Economics (IZA).
    37. Disdier, Anne-Celia & Mayer, Thierry, 2007. "Je t'aime, moi non plus: Bilateral opinions and international trade," European Journal of Political Economy, Elsevier, vol. 23(4), pages 1140-1159, December.
    38. Boisso, Dale & Ferrantino, Michael, 1997. "Economic Distance, Cultural Distance, and Openness in International Trade : Empirical Puzzles," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 456-484.
    39. Sofronis Clerides & Thanasis Stengos, 2006. "Love thy Neighbor, Love thy Kin: Voting Biases in the Eurovision Song Contest," University of Cyprus Working Papers in Economics 1-2006, University of Cyprus Department of Economics.
    40. Hager, Svenja & Schöbel, Rainer, 2005. "A note on the correlation smile," Tübinger Diskussionsbeiträge 297, University of Tübingen, School of Business and Economics.
    41. Schnabl, Gunther, 2005. "Der Festkurs als merkantilistische Handelspolitik : Chinas Währungs- und Geldpolitik im Umfeld globaler Ungleichgewichte," Tübinger Diskussionsbeiträge 291, University of Tübingen, School of Business and Economics.
    42. Licht, Georg & Stadler, Manfred, 2003. "Auswirkungen öffentlicher Forschungsförderung auf die private F&E-Tätigkeit: Eine mikroökonomische Evaluation," Tübinger Diskussionsbeiträge 256, University of Tübingen, School of Business and Economics.
    43. Kleinert, Jörn & Toubal, Farid, 2005. "A Structural Model of Export versus Affiliates Production," Tübinger Diskussionsbeiträge 288, University of Tübingen, School of Business and Economics.
    44. Stadler, Manfred, 2004. "Bildung, Innovationsdynamik und Produktivitätswachstum," Tübinger Diskussionsbeiträge 280, University of Tübingen, School of Business and Economics.
    45. Gunther Schnabl & Paul De Grauwe, 2004. "Nominal versus Real Convergence with Respect to EMU Accession - EMU Entry Scenarios for the New Member States," International Finance 0403008, University Library of Munich, Germany, revised 16 Feb 2005.
    46. Lengsfeld, Stephan & Schiller, Ulf, 2003. "Transfer Pricing Based on Actual versus Standard Costs," Tübinger Diskussionsbeiträge 272, University of Tübingen, School of Business and Economics.
    47. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1095-1131.
    48. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
    49. Bayer, Stefan, 2003. "Possibilities and limitations of economically valuating ecological damages," Tübinger Diskussionsbeiträge 254, University of Tübingen, School of Business and Economics.
    50. Laura Spierdijk & Michel Vellekoop, 2009. "The structure of bias in peer voting systems: lessons from the Eurovision Song Contest," Empirical Economics, Springer, vol. 36(2), pages 403-425, May.
    51. Tito Boeri & Herbert Brücker, 2005. "Why are Europeans so tough on migrants? [‘What a difference a constant makes: how predictable are international migration flows?’ in OECD]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 20(44), pages 630-703.
    52. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
    53. J.Baten & J.Wallusch, 2005. "Market Integration and Disintegration of Poland and Germany in the 18th Century," Economies et Sociétés (Serie 'Histoire Economique Quantitative'), Association Française de Cliométrie (AFC), issue 33, pages 1233-1264, July.
    54. Pierre Cahuc & Yann Algan, 2007. "Social Attitudes and Macroeconomic Performance:," 2007 Meeting Papers 414, Society for Economic Dynamics.
    55. Godart, Olivier N. & Toubal, Farid, 2005. "Cross The Border and Close The Gap? : How Do Migrants Enhance Trade," Tübinger Diskussionsbeiträge 289, University of Tübingen, School of Business and Economics.
    56. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    57. repec:hal:wpspec:info:hdl:2441/10183 is not listed on IDEAS
    58. Lachmund, Andreas & Kiesewetter, Dirk, 2004. "Wirkungen einer Abgeltungssteuer auf Investitionsentscheidungen und Kapitalstruktur von Unternehmen," Tübinger Diskussionsbeiträge 278, University of Tübingen, School of Business and Economics.
    59. Jean-Christophe Dumont & Georges Lamaitre, 2006. "Counting Immigrants and Expatriates in OECD Countries: A New Perspective," OECD Economic Studies, OECD Publishing, vol. 2005(1), pages 49-83.
    60. Molzahn, Alexander, 2004. "Optimale Fiskalpolitik und endogenes Wachstum," Tübinger Diskussionsbeiträge 285, University of Tübingen, School of Business and Economics.
    61. Güth, Werner & Stadler, Manfred, 2004. "Path Dependence Without Denying Deliberation : An Exercise Model Connecting Rationality and Evolution," Tübinger Diskussionsbeiträge 282, University of Tübingen, School of Business and Economics.
    62. Melitz, Jacques, 2008. "Language and foreign trade," European Economic Review, Elsevier, vol. 52(4), pages 667-699, May.
    63. Derek Gatherer, 2006. "Comparison of Eurovision Song Contest Simulation with Actual Results Reveals Shifting Patterns of Collusive Voting Alliances," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 9(2), pages 1-1.
    64. Jean-Christophe Dumont & Georges Lemaître, 2005. "Counting Immigrants and Expatriates in OECD Countries: A New Perspective," OECD Social, Employment and Migration Working Papers 25, OECD Publishing.
    65. Baur, Dirk & Schulze, Niels, 2005. "Coexceedances in financial markets--a quantile regression analysis of contagion," Emerging Markets Review, Elsevier, vol. 6(1), pages 21-43, April.
    66. Stadler, Manfred, 2006. "Education and innovation as twin-engines of growth," Tübinger Diskussionsbeiträge 302, University of Tübingen, School of Business and Economics.
    67. Fenn, Daniel & Suleman, Omer & Efstathiou, Janet & Johnson, Neil F., 2006. "How does Europe Make Its Mind Up? Connections, cliques, and compatibility between countries in the Eurovision Song Contest," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 360(2), pages 576-598.
    68. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    69. Yu, Peiyi & Neus, Werner, 2005. "Market Structure, Scale Efficiency, and Risk as Determinants of German Banking Profitability," Tübinger Diskussionsbeiträge 294, University of Tübingen, School of Business and Economics.
    70. Töpfer, Klaus, 2006. "Offene Fragen und wissenschaftliche Herausforderungen der Entwicklungsund Umweltpolitik," Tübinger Diskussionsbeiträge 301, University of Tübingen, School of Business and Economics.
    71. Jung, Robert & Kukuk, Martin & Liesenfeld, Roman, 2005. "Time Series of Count Data: Modelling and Estimation," Economics Working Papers 2005-08, Christian-Albrechts-University of Kiel, Department of Economics.
    72. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heger, Diana & Zaby, Alexandra K., 2009. "The propensity to patent with vertically differentiated products: An empirical investigation," Tübinger Diskussionsbeiträge 325, University of Tübingen, School of Business and Economics.
    2. Frontczak, Robert & Schöbel, Rainer, 2008. "Pricing American options with Mellin transforms," Tübinger Diskussionsbeiträge 319, University of Tübingen, School of Business and Economics.
    3. Maier, Ramona & Merz, Michael, 2008. "Credibility theory and filter theory in discrete and continuous time," Tübinger Diskussionsbeiträge 318, University of Tübingen, School of Business and Economics.
    4. Frontczak, Robert, 2009. "Valuing options in Heston's stochastic volatility model: Another analytical approach," Tübinger Diskussionsbeiträge 326, University of Tübingen, School of Business and Economics.
    5. Dymke, Björn M. & Walter, Andreas, 2006. "Insider trading in Germany: Do corporate insiders exploit inside information?," Tübinger Diskussionsbeiträge 309, University of Tübingen, School of Business and Economics.
    6. Heger, Diana & Zaby, Alexandra K., 2009. "The propensity to patent with horizontally differentiated products: An empirical investigation," Tübinger Diskussionsbeiträge 324, University of Tübingen, School of Business and Economics.
    7. Frontczak, Robert & Schöbel, Rainer, 2009. "On modified Mellin transforms, Gauss-Laguerre quadrature, and the valuation of American call options," Tübinger Diskussionsbeiträge 320, University of Tübingen, School of Business and Economics.
    8. Yalcin, Erdal, 2007. "The proximity-concentration trade-off in a dynamic framework," Tübinger Diskussionsbeiträge 312, University of Tübingen, School of Business and Economics.
    9. Brandes, Julia & Schüle, Tobias, 2007. "IMF's assistance: Devil's kiss or guardian angel?," Tübinger Diskussionsbeiträge 310, University of Tübingen, School of Business and Economics.
    10. Schüle, Tobias, 2006. "Creditor coordination with social learning and endogenous timing of credit decisions," Tübinger Diskussionsbeiträge 307, University of Tübingen, School of Business and Economics.
    11. Zaby, Alexandra K., 2009. "The propensity to patent in oligopolistic markets," Tübinger Diskussionsbeiträge 323, University of Tübingen, School of Business and Economics.
    12. Hager, Svenja & Schöbel, Rainer, 2006. "Deriving the dependence structure of portfolio credit derivatives using evolutionary algorithms," Tübinger Diskussionsbeiträge 300, University of Tübingen, School of Business and Economics.
    13. Rostek, Stefan & Schöbel, Rainer, 2006. "Risk preference based option pricing in a fractional Brownian market," Tübinger Diskussionsbeiträge 299, University of Tübingen, School of Business and Economics.
    14. Pitterle, Ingo A. & Steffen, Dirk, 2004. "Welfare effects of fiscal policy under alternative exchange rate regimes: the role of the scale variable of money demand," MPRA Paper 13047, University Library of Munich, Germany, revised Oct 2004.
    15. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    16. repec:edn:sirdps:417 is not listed on IDEAS
    17. Pascal L. Ghazalian, 2012. "Home Bias in Primary Agricultural and Processed Food Trade: Assessing the Effects of National Degree of Uncertainty Aversion," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 265-290, June.
    18. Anne-Célia Disdier & Silvio Tai & Lionel Fontagné & Thierry Mayer, 2010. "Bilateral trade of cultural goods," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 575-595, January.
    19. Falck, Oliver & Heblich, Stephan & Lameli, Alfred & Südekum, Jens, 2012. "Dialects, cultural identity, and economic exchange," Journal of Urban Economics, Elsevier, vol. 72(2), pages 225-239.
    20. Peter H. Egger & Andrea Lassmann, 2015. "The Causal Impact of Common Native Language on International Trade: Evidence from a Spatial Regression Discontinuity Design," Economic Journal, Royal Economic Society, vol. 0(584), pages 699-745, May.
    21. Baten, Jörg & Wallusch, Jacek, 2003. "Market integration and disintegration of Poland and Gemany [Germany] in the 18th century," Tübinger Diskussionsbeiträge 268, University of Tübingen, School of Business and Economics.

    More about this item

    Keywords

    International trade; Gravity equation; Cultural proximity; Eurovision song contest;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00641280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.