Cultural affinity and international trade in motion pictures: Empirical evidence using categorised internet search activity

Abstract

It is well established that cultural affinity between countries affects international trade patterns. To date, most research on this topic has only considered cultural affinity between a pair of countries as a single measure that is static over time. In this paper, we introduce a novel bi-directional and time-varying measure of cultural affinity and examine its relevance to sectoral trade with an application to the motion picture industry. Using Google Trends search topics related to countries, and specific to the ‘Arts and Entertainment’ category, we construct a measure of ‘relative search interest’ (RSI) as a proxy for cultural affinity. We incorporate this proxy into a structural gravity model of motion picture trade and find that a one percent increase in RSI is associated with a 0.2–0.4 percent increase in box office revenue flow. Our analysis suggests that RSI in other categories can provide useful insights in other industries.