Globalization and the Dynamics of Cultural Identity
33 Pages Posted: 8 May 2007
Date Written: April 2007
This paper presents a simple model where microfounded dynamics of cultural identity are endogenous and interact with an international trade equilibrium. This process generates a strong home bias under autarky. We then show that goods market integration causes a phenomenon of cultural divergence, whereby the distributions of cultures become more dissimilar across countries and one of the cultures that existed under autarky ultimately disappears. By way of contrast, we show that social integration causes cultural convergence and can counterbalance the effects of goods market integration.
Keywords: Cultural Identity, Cultural Transmission, International Trade
JEL Classification: F02, F10, Z10, Z13
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