Cultural Proximity and Trade

44 Pages Posted: 16 May 2008  

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim

Farid Toubal

Paris School of Economics (PSE); Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: 2007

Abstract

Cultural proximity may influence bilateral imports through a preference and a trade-cost channel. In empirical gravity models, conventional measures such as common language or religion fail to separately identify those channels. We use 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. Its statistical properties allow to identify the trade cost and preference channels. For trade in differentiated goods, we find evidence for both channels, with the latter accounting for at least 65% of the total effect. There is no preference effect for homogeneous goods.

Keywords: International Trade, Gravity Equation, Cultural Proximity, Eurovision Song Contest

JEL Classification: F12, F15, Z10

Suggested Citation

Felbermayr, Gabriel J. and Toubal, Farid, Cultural Proximity and Trade (2007). Available at SSRN: https://ssrn.com/abstract=1133987 or http://dx.doi.org/10.2139/ssrn.1133987

Gabriel J. Felbermayr (Contact Author)

University of Stuttgart-Hohenheim ( email )

Keplerstra├če 17
D-70174 Stuttgart
Germany

Farid Toubal

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Ecole Normale Superieure de Cachan (ENS) - Departement of Economics ans Management ( email )

France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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