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Cultural Distance and International Trade in Services: A Disaggregate View

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  • Philipp Harms

    (Johannes Gutenberg University Mainz)

  • Daria Shuvalova

    (Johannes Gutenberg University Mainz)

Abstract

In this paper, we estimate the effect of “cultural distance” on bilateral trade in services. Our measure of cultural distance is based on the scores developed by the social psychologist Geert Hofstede, which reflect country averages of individuals’ attitude towards power, uncertainty, individualism etc. Controlling for other standard ingredients of gravity equations, we show that an aggregate measure of cultural distance has a significantly negative effect on total bilateral services trade. However, once we take a more disaggregate view, we find that the strength and sign of this effect differs across various aspects of culture and across various types of services.

Suggested Citation

  • Philipp Harms & Daria Shuvalova, 2016. "Cultural Distance and International Trade in Services: A Disaggregate View," Working Papers 1606, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    • Handle: RePEc:jgu:wpaper:1606
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    3. Doanh, Nguyen Khanh & Gam, Nguyen Thi & Heo, Yoon, 2022. "The impact of intellectual property rights protection on trade: The role of a “third country” in market power and market expansion effects," Economic Systems, Elsevier, vol. 46(1).
    4. Shao Baorui & Zhang Zhiyuan & Li Zhao, 2024. "Currencies and culture: An amusing journey into the impacts of exchange rates on global creative industries," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(3), pages 647-672, May.
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    7. Christine Côté & Saul Estrin & Daniel Shapiro, 2020. "Expanding the international trade and investment policy agenda: The role of cities and services," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 199-223, September.

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    More about this item

    Keywords

    Trade in services; cultural distance; Hofstede scores; gravity equation;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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