Abstract
This paper examines the impact of culture on the industrial similarity between two adjacent counties during the process of trade liberalization between 1998 and 2007. The findings show that trade accelerates the industrial similarities between counties. The evolution of similarity is unequal between regions and over time, as industries in neighboring counties that belong to different dialect regions become more similar than industries within the same dialect region. The rise in industrial similarity is being fueled by the emergence of high-skill-intensive businesses as a result of trade-related technology spillovers. Adjacent counties of different dialects have greater skill endowments, which facilitate information transfer.
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