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Affinity and International Trade

Author

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  • Marcus Noland

    (Peterson Institute for International Economics)

Abstract

This paper examines the impact of American public attitudes toward foreign countries on the volume of trade. The issue is whether popular attitudes, as elicited in these surveys, convey any information about trust, risk, or transactions costs beyond what can be explained through standard economic models. The results of this paper suggest that they do, with a one standard deviation increase in warmth of feeling associated with a 20 to 31 percent larger trade volume when evaluated at the sample means. These public attitudes are in turn correlated with indices of cultural affinity and political ideology. A one standard deviation increase in the democracy score is associated with a 5 to 7 percent increase in trade. There might be additional secondary effects if democratization was associated with an increased likelihood of the removal of sanctions or the initiation of preferential trade relations.

Suggested Citation

  • Marcus Noland, 2005. "Affinity and International Trade," Working Paper Series WP05-3, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp05-3
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    File URL: https://www.piie.com/publications/working-papers/affinity-and-international-trade
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    References listed on IDEAS

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    2. Portes, Richard & Rey, Helene, 2005. "The determinants of cross-border equity flows," Journal of International Economics, Elsevier, vol. 65(2), pages 269-296, March.
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    7. 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.
    8. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12426.
    9. Marcus Noland, 2005. "Popular Attitudes, Globalization and Risk," International Finance, Wiley Blackwell, vol. 8(2), pages 199-229, August.
    10. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
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    12. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
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    Citations

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    Cited by:

    1. Lamara Hadjou, 2012. "Insertion of Algeria in globalization: an approach based on commercial affinities [Insertion de l'Algérie dans la mondialisation : une approche par les affinités commerciales]," Post-Print hal-02804700, HAL.
    2. Michael J. Ferrantino, 2006. "Quantifying the Trade and Economic Effects of Non-Tariff Measures," OECD Trade Policy Papers 28, OECD Publishing.
    3. Ruwan Jayathilaka & Nandasiri Keembiyahetti, 2009. "Adverse Selection Effect for South Asian Countries in FTA Formation," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 1-30, January.
    4. Rongxing Guo, 2015. "China’s spatial (dis)integration as a multiethnic paradox: what do the interprovincial data say?," China Finance and Economic Review, Springer, vol. 4(1), pages 1-21, December.
    5. Marcus Noland, 2005. "Popular Attitudes, Globalization and Risk," International Finance, Wiley Blackwell, vol. 8(2), pages 199-229, August.
    6. Rongxing Guo, 2007. "Linguistic and Religious Influences on Foreign Trade: Evidence from East Asia," Asian Economic Journal, East Asian Economic Association, vol. 21(1), pages 101-121, March.

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    More about this item

    Keywords

    international trade; gravity model; trust; risk;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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