Cultural Preferences in International Trade: Evidence from the Globalization of Korean Pop Culture

Abstract

The Korean pop culture (TV dramas and K-pop music) has grown immensely popular across the globe over the past two decades. This paper analyzes its impacts on international trade. We compile a cross-country panel dataset of South Korea's TV show exports to over 150 countries for the period of 1998-2014. These variations in exposure to Korean pop cultures are used to identify changes in consumer preferences for Korean merchandise across time, countries, and products (at the HS 4-digit level). First, we find that more Korean TV show exports significantly increase Korean exports of goods for women, while the effects are much smaller on men's merchandise. This strongly supports the demand-side preference mechanism, because supply-side factors can hardly generate such gender bias within the same product category. Second, we find that the TV show effect is much stronger for consumer goods than capital or intermediate goods. Third, we show that there exist significant and positive effects even for goods that are not actively advertised. Together, these findings provide evidence on the importance of cultural preferences and their diffusions in economic exchanges.