International Migration and Economic Integration
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International Migration and Economic Integration

Understanding the Immigrant–Trade Link

Roger White and Bedassa Tadesse

This essential volume examines the influence of immigrants on the process of international economic integration – specifically, their influences on bilateral and multilateral trade flows. It extends beyond the identification and explanation of the immigrant–trade link and offers a more expansive treatment of the subject matter, making it the most comprehensive volume of its kind. The authors present abundant evidence that confirms the positive influences of immigrants on trade between their home and host countries; however the immigrant–trade link may not be universal. The operability of the link is found to depend on a variety of factors related to immigrants’ home countries, their host countries, the types of goods and services being traded and the anthropogenic characteristics of the immigrants themselves.
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Chapter 6: The Trade-Inhibiting Effects of Cultural Differences: Evidence from Nine OECD Countries

Roger White and Bedassa Tadesse


A country’s culture can be defined as an amalgam of its population’s shared habits and traditions, learned beliefs and customs, attitudes, norms and values. Cultural dissimilarity between countries thus corresponds with social and institutional dissimilarity and/or information asymmetries. Therefore, cultural differences can serve as a proxy for the extent to which the trust and commitment necessary to initiate trade deals and to complete transactions is lacking. Prior studies that have examined various determinants of trade flows have generally given little attention to the effects of cultural differences. In the few cases where these effects have been examined, a consensus is lacking. Guiso et al. (2005), for example, reports a positive relationship between cultural distance and trade while Linders et al. (2005) and Boisso and Ferrantino (1997) report that greater cultural distance inhibits trade. Several studies have treated the potential effect of cultural dissimilarity as a component of a more broadly-defined set of transaction costs that is often represented by variables which measure the physical distance between trading partners or that identify commonality of language and/or colonial ties. There is a plausible correlation between cultural differences and these variables; however, both common language and colonial ties are, at best, imperfect representations of cultural similarity. Transportation costs – as represented by geographic distance – are also not synonymous with transaction costs. For example, while Mexico and  Canada are located at comparable geographic distances from the US, even when accounting for (un)commonality of languages, there exists significant disparity in the cultural distance between the...

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