Cultural Diversity a Barrier to Riches? Gunes Gokmen New Economic - - PowerPoint PPT Presentation

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Cultural Diversity a Barrier to Riches? Gunes Gokmen New Economic School Culture, Diversity and Development October 2013 Gokmen (NES) Culture and Trade October 2013 1 / 30 Motivation "The Clash of Civilizations?" (Samuel

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SLIDE 1

Cultural Diversity a Barrier to Riches? Gunes Gokmen

New Economic School

Culture, Diversity and Development

October 2013

Gokmen (NES) Culture and Trade October 2013 1 / 30

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SLIDE 2

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

Gokmen (NES) Culture and Trade October 2013 2 / 30

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SLIDE 3

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

I Fundamental source of clashes in the post-Cold War era will not be

primarily ideological or primarily economic

Gokmen (NES) Culture and Trade October 2013 2 / 30

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SLIDE 4

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

I Fundamental source of clashes in the post-Cold War era will not be

primarily ideological or primarily economic

I But, the dominating source of clashes will be cultural Gokmen (NES) Culture and Trade October 2013 2 / 30

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SLIDE 5

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

I Fundamental source of clashes in the post-Cold War era will not be

primarily ideological or primarily economic

I But, the dominating source of clashes will be cultural

Studies limited to military con‡ict (Chiozza, 2002; Russett et al., 2000)

Gokmen (NES) Culture and Trade October 2013 2 / 30

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SLIDE 6

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

I Fundamental source of clashes in the post-Cold War era will not be

primarily ideological or primarily economic

I But, the dominating source of clashes will be cultural

Studies limited to military con‡ict (Chiozza, 2002; Russett et al., 2000) Economic implications went unexamined

Gokmen (NES) Culture and Trade October 2013 2 / 30

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SLIDE 7

Motivation

"The Clash of Civilizations?" (Samuel Huntington, 1993)

I Fundamental source of clashes in the post-Cold War era will not be

primarily ideological or primarily economic

I But, the dominating source of clashes will be cultural

Studies limited to military con‡ict (Chiozza, 2002; Russett et al., 2000) Economic implications went unexamined An economic clash of cultures proxied by bilateral trade relations?

Gokmen (NES) Culture and Trade October 2013 2 / 30

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Culture?

How to measure culture to analyze barriers to trade?

Gokmen (NES) Culture and Trade October 2013 3 / 30

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Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc.

Gokmen (NES) Culture and Trade October 2013 3 / 30

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SLIDE 10

Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc. Four measures of culture to capture di¤erent aspects of it

Gokmen (NES) Culture and Trade October 2013 3 / 30

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Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc. Four measures of culture to capture di¤erent aspects of it

I Civilizations Gokmen (NES) Culture and Trade October 2013 3 / 30

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SLIDE 12

Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc. Four measures of culture to capture di¤erent aspects of it

I Civilizations I Religion Gokmen (NES) Culture and Trade October 2013 3 / 30

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Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc. Four measures of culture to capture di¤erent aspects of it

I Civilizations I Religion I Ethnicity Gokmen (NES) Culture and Trade October 2013 3 / 30

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SLIDE 14

Culture?

How to measure culture to analyze barriers to trade? Culture is elusive: values, beliefs, customs, codes, rituals, etc. Four measures of culture to capture di¤erent aspects of it

I Civilizations I Religion I Ethnicity I Language Gokmen (NES) Culture and Trade October 2013 3 / 30

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Culture and Trade

International trade an important component of national income

Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD) Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD)

Barriers to trade (McCallum, 1995; Anderson, 2011)

Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD)

Barriers to trade (McCallum, 1995; Anderson, 2011)

I Examples: Borders, Distance, Legal Barriers, etc. Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD)

Barriers to trade (McCallum, 1995; Anderson, 2011)

I Examples: Borders, Distance, Legal Barriers, etc.

Cultural di¤erences: a barrier to international trade

Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD)

Barriers to trade (McCallum, 1995; Anderson, 2011)

I Examples: Borders, Distance, Legal Barriers, etc.

Cultural di¤erences: a barrier to international trade

I Source of uncertainty Gokmen (NES) Culture and Trade October 2013 4 / 30

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Culture and Trade

International trade an important component of national income

I e.g. Russia’s trade to GDP ratio in 2009=24% (OECD)

Barriers to trade (McCallum, 1995; Anderson, 2011)

I Examples: Borders, Distance, Legal Barriers, etc.

Cultural di¤erences: a barrier to international trade

I Source of uncertainty I Informational costs of doing business Gokmen (NES) Culture and Trade October 2013 4 / 30

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What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

Gokmen (NES) Culture and Trade October 2013 5 / 30

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What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 Gokmen (NES) Culture and Trade October 2013 5 / 30

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What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 I Cultural dissimilarity dampens bilateral trade Gokmen (NES) Culture and Trade October 2013 5 / 30

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What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 I Cultural dissimilarity dampens bilateral trade

Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era?

Gokmen (NES) Culture and Trade October 2013 5 / 30

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What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 I Cultural dissimilarity dampens bilateral trade

Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era?

I Negative impact of cultural di¤erences on trade is stronger in the

post-Cold War era than during the Cold War

Gokmen (NES) Culture and Trade October 2013 5 / 30

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SLIDE 27

What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 I Cultural dissimilarity dampens bilateral trade

Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era?

I Negative impact of cultural di¤erences on trade is stronger in the

post-Cold War era than during the Cold War

What is the underlying mechanism for the di¤erential impact of cultural dissimilarity over time?

Gokmen (NES) Culture and Trade October 2013 5 / 30

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SLIDE 28

What are we after?

Does cultural dissimilarity a¤ect bilateral trade?

I Empirical analysis of bilateral trade ‡ows, 144 countries, 1950-2006 I Cultural dissimilarity dampens bilateral trade

Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era?

I Negative impact of cultural di¤erences on trade is stronger in the

post-Cold War era than during the Cold War

What is the underlying mechanism for the di¤erential impact of cultural dissimilarity over time?

I Suppression of cultural di¤erences by ideology during the Cold War Gokmen (NES) Culture and Trade October 2013 5 / 30

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Related Literature

Cultural barriers to trade (Felbermayr and Toubal, 2010; Guiso et al., 2009)

Gokmen (NES) Culture and Trade October 2013 6 / 30

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Related Literature

Cultural barriers to trade (Felbermayr and Toubal, 2010; Guiso et al., 2009)

I Dynamics of the e¤ect of cultural heterogeneity on trade Gokmen (NES) Culture and Trade October 2013 6 / 30

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Related Literature

Cultural barriers to trade (Felbermayr and Toubal, 2010; Guiso et al., 2009)

I Dynamics of the e¤ect of cultural heterogeneity on trade

Clash of Civilizations thesis (Chiozza, 2002; Russett et al., 2000)

Gokmen (NES) Culture and Trade October 2013 6 / 30

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Related Literature

Cultural barriers to trade (Felbermayr and Toubal, 2010; Guiso et al., 2009)

I Dynamics of the e¤ect of cultural heterogeneity on trade

Clash of Civilizations thesis (Chiozza, 2002; Russett et al., 2000)

I First to study it from an economic perspective Gokmen (NES) Culture and Trade October 2013 6 / 30

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SLIDE 33

Related Literature

Cultural barriers to trade (Felbermayr and Toubal, 2010; Guiso et al., 2009)

I Dynamics of the e¤ect of cultural heterogeneity on trade

Clash of Civilizations thesis (Chiozza, 2002; Russett et al., 2000)

I First to study it from an economic perspective I Explanation for the di¤erential impact of cultural dissimilarity over time Gokmen (NES) Culture and Trade October 2013 6 / 30

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Empirical Speci…cation

Gokmen (NES) Culture and Trade October 2013 7 / 30

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Empirical Speci…cation

log Importsijt = a + γCij + αkτkijt + Ri Yeart + Rj Yeart + ǫijt (1) Panel data require time-varying importer and exporter …xed e¤ects

(Baldwin & Taglioni, 2007)

I High dimensionality of …xed e¤ects a problem I Hard to estimate with current computing power

"Zigzag" algorithm (Guimarães and Portugal, 2010)

Gokmen (NES) Culture and Trade October 2013 8 / 30

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Data

Gokmen (NES) Culture and Trade October 2013 9 / 30

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Data

Key Data

Dep Var: Log Import Flows (COW International Trade Data Set Version 2.01, 1950-2006) Variables of Interest:

I Indicator for whether two countries in a dyad belong to di¤erent

civilizations,10 (Huntington’s categorization)

I Indicator for whether two countries in a dyad have di¤erent majority

religion, 8 (Ellingsen Measure, 1945-2001)

I Indicator for whether two countries in a dyad have di¤erent majority

ethnicity, 103 (Ellingsen Measure, 1945-2001)

I Indicator for whether two countries in a dyad have di¤erent majority

language, 89 (Ellingsen Measure, 1945-2001)

Gokmen (NES) Culture and Trade October 2013 10 / 30

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SLIDE 38

Gokmen (NES) Culture and Trade October 2013 11 / 30

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Data

Key Data

Dep Var: Log Import Flows (COW International Trade Data Set Version 2.01, 1950-2006) Variables of Interest:

I Indicator for whether two countries in a dyad belong to di¤erent

civilizations,10 (Huntington’s categorization)

I Indicator for whether two countries in a dyad have di¤erent majority

religion, 8 (Ellingsen Measure, 1945-2001)

I Indicator for whether two countries in a dyad have di¤erent majority

ethnicity, 103 (Ellingsen Measure, 1945-2001)

I Indicator for whether two countries in a dyad have di¤erent majority

language, 89 (Ellingsen Measure, 1945-2001)

Gokmen (NES) Culture and Trade October 2013 12 / 30

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Other Variables

Geographic Factors: Contiguity, Distance Political Factors: Colonial Link, Same Country, Common Colonizer, Legal Origins Economic Factors: FTA, WTO, Common Currency, GSP

Gokmen (NES) Culture and Trade October 2013 13 / 30

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Results

Gokmen (NES) Culture and Trade October 2013 14 / 30

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Table 1: Impact of Culture on Bilateral Trade, 1950-2006

(1) (2) (3) (4) (5) (6) (7) (8) Di¤erent Civilizations -0.227

  • 0.111
  • 0.004

(0.035) (0.037) (0.040) Di¤erent Religion

  • 0.293
  • 0.233
  • 0.231

(0.031) (0.032) (0.035) Di¤erent Ethnicity

  • 0.491
  • 0.256 -0.252

(0.080) (0.080) (0.080) Di¤erent Language

  • 0.626 -0.561 -0.550 -0.541 -0.465

(0.064) (0.068) (0.066) (0.066) (0.070) Additional Controls YES YES YES YES YES YES YES YES Importer-Year E¤ects YES YES YES YES YES YES YES YES Exporter-Year E¤ects YES YES YES YES YES YES YES YES N 385379 385379 385379 385379 385379 385379 385379 385379 R2 0.717 0.718 0.718 0.718 0.719 0.719 0.719 0.719

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SLIDE 43

What are we after?

Question 1 Does cultural dissimilarity a¤ect bilateral trade? Answer Cultural dissimilarity dampens bilateral trade

Gokmen (NES) Culture and Trade October 2013 16 / 30

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What are we after?

Question 2 Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era?

Gokmen (NES) Culture and Trade October 2013 17 / 30

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Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

Gokmen (NES) Culture and Trade October 2013 18 / 30

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Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

I In the post-Cold War, primary axis of clashes along cultural divisions Gokmen (NES) Culture and Trade October 2013 18 / 30

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Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

I In the post-Cold War, primary axis of clashes along cultural divisions

Implications for economic clashes among cultural groups

Gokmen (NES) Culture and Trade October 2013 18 / 30

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SLIDE 48

Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

I In the post-Cold War, primary axis of clashes along cultural divisions

Implications for economic clashes among cultural groups

I Cultural similarity fosters economic interdependence Gokmen (NES) Culture and Trade October 2013 18 / 30

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SLIDE 49

Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

I In the post-Cold War, primary axis of clashes along cultural divisions

Implications for economic clashes among cultural groups

I Cultural similarity fosters economic interdependence

Tackle The Clash of Civilizations thesis from an economic standpoint

Gokmen (NES) Culture and Trade October 2013 18 / 30

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SLIDE 50

Economic Clash of Civilizations

Samuel Huntington (1993) ) "The Clash of Civilizations?"

I In the post-Cold War, primary axis of clashes along cultural divisions

Implications for economic clashes among cultural groups

I Cultural similarity fosters economic interdependence

Tackle The Clash of Civilizations thesis from an economic standpoint No author ever put it into rigorous testing

Gokmen (NES) Culture and Trade October 2013 18 / 30

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SLIDE 51

Same Ethnicity Different Ethnicity Ratio Same Ethnicity Different Ethnicity Ratio

.5 1 1.5 2 Mean Log Imports Cold War post-Cold War Change in Average Imports of Same and Different Ethnicity Dyads over Time

Figure 1: Evolution of Mean Log Imports over the Cold War and the post-Cold War Periods for Di¤erent and Same Ethnicity Country Dyads

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SLIDE 52

Table 2: Impact of Culture on Trade: Cold War vs. post-Cold War Comparisons

(1) (2) (3) Cold War post-Cold War Chow P-value Di¤erent Civilizations

  • 0.038
  • 0.514

0.000 (0.040) (0.040) Di¤erent Religion

  • 0.177
  • 0.435

0.000 (0.037) (0.037) Di¤erent Ethnicity

  • 0.324
  • 0.715

0.000 (0.090) (0.086) Di¤erent Language

  • 0.336
  • 1.062

0.000 (0.072) (0.070) Additional Controls YES YES Importer-Year E¤ects YES YES Exporter-Year E¤ects YES YES

Gokmen (NES) Culture and Trade October 2013 20 / 30

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SLIDE 53

Tari¤ Equivalent Cost of Cultural Di¤erence

Table 3: Tari¤ Equivalent Costs of Cultural Barriers to Trade Cold War post-Cold War (1) (2) (3) (4) (5) (6) σ=5 σ=8 σ=10 σ=5 σ=8 σ=10 Di¤erent Civilizations 0.95 0.54 0.42 13.71 7.61 5.87 Di¤erent Religion 4.52 2.56 1.98 11.48 6.41 4.95 Di¤erent Ethnicity 8.43 4.73 3.66 19.57 10.75 8.26 Di¤erent Language 8.76 4.91 3.80 30.40 16.38 12.52

Tari¤ Equivalent Cost Gokmen (NES) Culture and Trade October 2013 21 / 30

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SLIDE 54

What are we after?

Question 2 Does cultural dissimilarity have a stronger impact on trade in the post-Cold War era? Answer Negative impact of cultural di¤erences on trade is stronger in the post-Cold War era than during the Cold War

Gokmen (NES) Culture and Trade October 2013 22 / 30

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SLIDE 55

What are we after?

Question 3 What is the underlying mechanism for the di¤erential impact of cultural dissimilarity over time?

Gokmen (NES) Culture and Trade October 2013 23 / 30

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SLIDE 56

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 57

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 58

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 59

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 60

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies I 2nd World: USSR & its allies Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 61

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies I 2nd World: USSR & its allies I 3rd World: unaligned Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 62

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies I 2nd World: USSR & its allies I 3rd World: unaligned

"Di¤erent Blocs" indicator

Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 63

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies I 2nd World: USSR & its allies I 3rd World: unaligned

"Di¤erent Blocs" indicator A comparison of culture and ideology over time

Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 64

An Explanation

Cultural di¤erences were suppressed by ideology during the Cold War

I Then, the e¤ect of ideology and culture should evolve oppositely

Identify Cold-War blocs

I 1st World: US & its allies I 2nd World: USSR & its allies I 3rd World: unaligned

"Di¤erent Blocs" indicator A comparison of culture and ideology over time

I Evolution of the e¤ects of cultural and ideological dissimilarities on

trade

Gokmen (NES) Culture and Trade October 2013 24 / 30

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SLIDE 65
  • 1.5
  • 1
  • .5

.5 Parameter Estimate 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Year Different Religion Different Blocs Evolution of the Effects of Different Religion and Different Blocs on Trade over Time

Figure 2: Parameter Estimates and 95% Con…dence Bands of Di¤erent Religion and Di¤erent Blocs Variables Throughout Years

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SLIDE 66

Table 4: E¤ect of Religion on Trade, Triple Interaction with Same Bloc and post-Cold War

A: Triple Interaction B: Composite E¤ect of Di¤erent Religion Di¤erent Religion

  • 0.122

Cold War post-Cold War (0.037) Same Bloc 0.229

  • 0.299

Same Bloc

  • 0.014

(0.106) (0.103) (0.073) Di¤erent Blocs -0.122

  • 0.531

Di¤erent ReligionSame Bloc 0.351 (0.037) (0.037) (0.106) Di¤erent ReligionPost-Cold War

  • 0.409

(0.040) Same BlocPost-Cold War 0.046 (0.065) Di¤erent ReligionSame BlocPost-Cold War

  • 0.119

(0.103) Additional Controls YES Importer-Year E¤ects YES Exporter-Year E¤ects YES N 385379 R2 0.718

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SLIDE 67

What are we after?

Question 3 What is the underlying mechanism for the di¤erential impact of cultural dissimilarity over time? Answer Suppression of cultural di¤erences by ideology Thus, cultural di¤erences come to the forefront as a trade barrier only in the post-Cold War era, after the demise of ideological rivalries

Gokmen (NES) Culture and Trade October 2013 27 / 30

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SLIDE 68

Sensitivity Analysis

Geography

Geography

Genetic Distance

Genetic Distance

Political Proximity

Political Proximity

Zero trade ‡ows

Heckman Inverse Hyperbolic Sine Transformation Probit

Dynamic Gravity Model

Dynamic Gravity

Principal Component Analysis

PCA Gokmen (NES) Culture and Trade October 2013 28 / 30

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SLIDE 69

Conclusion

1

Culture matters for bilateral trade relations

Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 70

Conclusion

1

Culture matters for bilateral trade relations

2

Culture matters more in the post-Cold War period

Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 71

Conclusion

1

Culture matters for bilateral trade relations

2

Culture matters more in the post-Cold War period

3

Ideology suppressed cultural di¤erences during the Cold War

Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 72

Conclusion

1

Culture matters for bilateral trade relations

2

Culture matters more in the post-Cold War period

3

Ideology suppressed cultural di¤erences during the Cold War Disharmony in post-Cold War trade relations across cultures

Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 73

Conclusion

1

Culture matters for bilateral trade relations

2

Culture matters more in the post-Cold War period

3

Ideology suppressed cultural di¤erences during the Cold War Disharmony in post-Cold War trade relations across cultures

I A disruption to world trade system Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 74

Conclusion

1

Culture matters for bilateral trade relations

2

Culture matters more in the post-Cold War period

3

Ideology suppressed cultural di¤erences during the Cold War Disharmony in post-Cold War trade relations across cultures

I A disruption to world trade system

Policy design to promote inter-cultural trade

Gokmen (NES) Culture and Trade October 2013 29 / 30

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SLIDE 75

Future Research

Culture puzzle in trade

Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 76

Future Research

Culture puzzle in trade Better understand underlying reasons

Gokmen (NES) Culture and Trade October 2013 30 / 30

slide-77
SLIDE 77

Future Research

Culture puzzle in trade Better understand underlying reasons

I Disaggregated trade data Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 78

Future Research

Culture puzzle in trade Better understand underlying reasons

I Disaggregated trade data I Governments’ role Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 79

Future Research

Culture puzzle in trade Better understand underlying reasons

I Disaggregated trade data I Governments’ role I What type of goods Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 80

Future Research

Culture puzzle in trade Better understand underlying reasons

I Disaggregated trade data I Governments’ role I What type of goods I Economic regionalism Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 81

Future Research

Culture puzzle in trade Better understand underlying reasons

I Disaggregated trade data I Governments’ role I What type of goods I Economic regionalism

Role of minorities in trade

Gokmen (NES) Culture and Trade October 2013 30 / 30

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SLIDE 82

Thank You

Gokmen (NES) Culture and Trade October 2013 31 / 30

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SLIDE 83

Theory suggests we estimate: (1 σ) log τ Take standard values of σ in the literature (Anderson & Van Wincoop,

2003)

Retrieve τ

Go To Table

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SLIDE 84

Table 5: Culture vs. Geography

(1) (2) (3) (4) Di¤erent Civilizations 0.165 (0.046) Di¤erent CivilizationsPost-Cold War

  • 0.673

(0.035) Di¤erent Religion

  • 0.040

(0.045) Di¤erent ReligionPost-Cold War

  • 0.429

(0.042) Di¤erent Ethnicity

  • 0.055

(0.087) Di¤erent EthnicityPost-Cold War

  • 0.732

(0.081) Di¤erent Language

  • 0.091

(0.079) Di¤erent LanguagePost-Cold War

  • 1.003

(0.065)

Continental Pair Dummies YES YES YES YES Log Abs. Di¤. in Elevation YES YES YES YES Log Abs. Di¤. in Latitudes YES YES YES YES Log Abs. Di¤. in Longitudes YES YES YES YES # Landlocked Countries YES YES YES YES # Island Countries YES YES YES YES Log Abs. Di¤. in Distance to Coast YES YES YES YES

  • Abs. Dif. in Tropical Land Percentage

YES YES YES YES

  • Abs. Dif. in Subtropical Land Percentage

YES YES YES YES

  • Abs. Dif. in Polar Land Percentage

YES YES YES YES

  • Abs. Dif. in Boreal Land Percentage

YES YES YES YES

  • Abs. Dif. in Temperate Desert Percentage

YES YES YES YES

  • Abs. Dif. in Tropical Desert Percentage

YES YES YES YES

  • Abs. Dif. in Dry Land Percentage

YES YES YES YES

  • Abs. Dif. in Wet Land Percentage

YES YES YES YES

  • Abs. Dif. in Log Hydrocarbons Per Capita

YES YES YES YES Additional Controls YES YES YES YES Importer-Year E¤ects YES YES YES YES Exporter-Year E¤ects YES YES YES YES

N 330136 330136 330136 330136 R2 0.740 0.739 0.739 0.740

Robustness

slide-85
SLIDE 85

Table 6: Do Our Measures of Culture Survive Genetic Distance?

(1) (2) (3) (4) (5) Di¤erent Civilizations 0.083 (0.039) Di¤erent CivilizationsPost-Cold War

  • 0.661

(0.035) Di¤erent Religion

  • 0.121

(0.037) Di¤erent ReligionPost-Cold War

  • 0.414

(0.041) Di¤erent Ethnicity

  • 0.173

(0.090) Di¤erent EthnicityPost-Cold War

  • 0.607

(0.080) Di¤erent Language

  • 0.228

(0.071) Di¤erent LanguagePost-Cold War

  • 0.952

(0.061) Genetic Distance

  • 0.00009 -0.00012 -0.00010 -0.00008 -0.00010

(0.00002) (0.00002) (0.00002) (0.00002) (0.00002) Genetic DistancePost-Cold War

  • 0.00018
  • 0.00005
  • 0.00017 -0.00014 -0.00013

(0.00002) (0.00002) (0.00002) (0.00002) (0.00002) Additional Controls YES YES YES YES YES Importer-Year E¤ects YES YES YES YES YES Exporter-Year E¤ects YES YES YES YES YES N 382002 382002 382002 382002 382002 R2 0.718 0.720 0.720 0.719 0.721

Robustness

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SLIDE 86

Table 7: Culture vs. Political Proximity

(1) (2) (3) (4) Di¤erent Civilizations 0.190 (0.041) Di¤erent CivilizationsPost-Cold War -0.739 (0.035) Di¤erent Religion

  • 0.042

(0.038) Di¤erent ReligionPost-Cold War

  • 0.367

(0.039) Di¤erent Ethnicity

  • 0.018

(0.091) Di¤erent EthnicityPost-Cold War

  • 0.756

(0.083) Di¤erent Language 0.029 (0.078) Di¤erent LanguagePost-Cold War

  • 0.973

(0.064) UN Correlation 0.152 0.178 0.218 0.230 (0.053) (0.053) (0.053) (0.053) Regime Di¤erence

  • 0.005
  • 0.002
  • 0.004
  • 0.003

(0.001) (0.001) (0.001) (0.001) Alliance 0.425 0.391 0.412 0.337 (0.049) (0.049) (0.049) (0.052) Additional Controls YES YES YES YES Importer-Year E¤ects YES YES YES YES Exporter-Year E¤ects YES YES YES YES N 355227 355227 355227 355227 R2 0.726 0.725 0.724 0.725

Robustness

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SLIDE 87

Table 8: Zero Trade Flows, Heckman Two-Step Selection Model, Cold War vs. post-Cold War Comparisons

A: Heckman without exclusion restrictions (1) (2) Cold War post-Cold War Di¤erent Civilizations 0.083

  • 0.285

(0.050) (0.053) Di¤erent Religion

  • 0.075
  • 0.310

(0.044) (0.046) Di¤erent Ethnicity

  • 0.298
  • 0.680

(0.090) (0.086) Di¤erent Language

  • 0.238
  • 0.892

(0.082) (0.079) B: Heckman with exclusion restrictions (1) (2) Cold War post-Cold War Di¤erent Civilizations 0.081

  • 0.288

(0.050) (0.052) Di¤erent Religion

  • 0.076
  • 0.313

(0.044) (0.046) Di¤erent Ethnicity

  • 0.299
  • 0.682

(0.090) (0.086) Di¤erent Language

  • 0.238
  • 0.897

(0.082) (0.080) Additional Controls YES YES Importer-Year E¤ects YES YES Exporter-Year E¤ects YES YES

Robustness

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SLIDE 88

Table 9: Zero Trade Flows, Inverse Hyperbolic Sine Transformation

(1) (2) (3) (4) Di¤erent Civilizations

  • 0.018

(0.028) Di¤erent CivilizationsPost-Cold War -0.517 (0.024) Di¤erent Religion

  • 0.042

(0.027) Di¤erent ReligionPost-Cold War

  • 0.319

(0.029) Di¤erent Ethnicity

  • 0.144

(0.068) Di¤erent EthnicityPost-Cold War

  • 0.583

(0.061) Di¤erent Language

  • 0.105

(0.053) Di¤erent LanguagePost-Cold War

  • 0.832

(0.047) Additional Controls YES YES YES YES Importer-Year E¤ects YES YES YES YES Exporter-Year E¤ects YES YES YES YES N 425240 425240 425240 425240 R2 0.749 0.748 0.748 0.749

Robustness

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SLIDE 89

Table 10: Zero Trade Flows: Extensive Margin of Trade and Culture, Probit (1) (2) (3) Entire Sample Cold War post-Cold War Di¤erent Civilizations

  • 0.0085
  • 0.0063
  • 0.0105

(0.0008) (0.0009) (0.001) Di¤erent Religion

  • 0.0027
  • 0.0002
  • 0.0060

(0.0009) (0.002) (0.001) Di¤erent Ethnicity

  • 0.0060
  • 0.0038
  • 0.0069

(0.001) (0.0015) (0.001) Di¤erent Language

  • 0.0096
  • 0.0052
  • 0.0123

(0.001) (0.001) (0.001)

Robustness

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SLIDE 90

Table 11: Dynamic Panel Estimation

(1) (2) (3) (4) Di¤erent Civilizations 0.012 (0.008) Di¤erent CivilizationsPost-Cold War -0.140 (0.008) Di¤erent Religion

  • 0.010

(0.008) Di¤erent ReligionPost-Cold War

  • 0.093

(0.010) Di¤erent Ethnicity

  • 0.038

(0.018) Di¤erent EthnicityPost-Cold War

  • 0.147

(0.017) Di¤erent Language

  • 0.055

(0.015) Di¤erent LanguagePost-Cold War

  • 0.189

(0.014) Log Imports (t 1) 0.801 0.802 0.802 0.801 (0.002) (0.002) (0.002) (0.002) Additional Controls YES YES YES YES Importer-Year E¤ects YES YES YES YES Exporter-Year E¤ects YES YES YES YES N 352755 352755 352755 352755 R2 0.900 0.900 0.900 0.900

Robustness

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SLIDE 91

Table 12: Principal Component Analysis of Cultural Di¤erence

(1) (2) (3) (4) Cultural Di¤erence

  • 0.131 -0.037
  • 0.004
  • 0.044

(0.011) (0.013) (0.017) (0.013) Cultural Di¤erencePost-Cold War

  • 0.220 -0.222 -0.214

(0.010) (0.010) (0.010) Di¤erent Blocs

  • 0.886

(0.067) Di¤erent BlocsPost-Cold War 0.643 (0.077) Di¤erent Language

  • 0.239

(0.089) Additional Controls YES YES YES YES Importer-Year E¤ects YES YES YES YES Exporter-Year E¤ects YES YES YES YES N 385379 385379 385379 385379 R2 0.719 0.720 0.721 0.722

Robustness