Does cultural distance hinder exports?: A comparative study of China and the United States

Abstract

There is little consensus on the role of cultural distance in exports. Studies have shown that positive or negative effects of cultural distance on exports are attributed to the substitution or complementary effects through trade costs and preference. Using export data of the two world's largest exporting countries, China and the United States (US), with 97 trading partners from 2004 to 2016, we employ a nonlinear gravity equation to examine the potential effects of cultural distance. We find that cultural distance hinders exports for both China and the US through trade costs and preference channels. Cultural distance impedes the exports of China and the US along traditional vs. secular-rational values (TSR) and survival vs. self-expression values (SSE) dimensions, respectively. Furthermore, differentiated products, variations in continents, and levels of economic development of trading partners separately vary for the effects of cultural distance on the exports of China and the US.