Cultural Proximity and Bilateral Trade in the European Union

Cyrus, Teresa L. (2011) Cultural Proximity and Bilateral Trade in the European Union. [Conference Proceedings] (Submitted)

Preview

PDF - Draft Version Download (205Kb) | Preview

Abstract

Since its origins, the European Union has been focused on removing the barriers to the full integration of its members’ economies. But while formal institutions have adapted, have informal social norms also changed? In this paper, I use the variables from the World Values Survey to estimate the cultural “distance” between countries, with the goal of examining the extent to which cultural distance and bilateral trade are related. Gravity regressions are used to determine the extent to which cultural distance affects trade flows; I find that cultural distance reduces trade, but less for EU members than for the rest of the world. I then explore the determinants of cultural distance. For most country-pairs in the sample, trade is found to increase rather than decrease the cultural distance between countries, but for EU members, trade reduces cultural distance.

Actions (login required)