Understanding the Immigrant–Trade Link
Chapter 7: Immigrants and the Effects of Cultural Distance: An Examination of Aggregate US Trade Data
7 Immigrants and the effects of cultural distance: An examination of aggregate US trade data Given the trade-inhibiting effects that cultural differences between immigrants’ host and home countries are found to have on bilateral trade flows and the observed variation in the extent to which immigrants counteract these effects, in this chapter we examine the influences of cultural distance and its component dimensions using data for the US and 54 trading partners that span the years 1997 through 2004.1 As noted in Chapter 6, a country’s culture can be described as an amalgam of its population’s shared habits and traditions, learned beliefs and customs, attitudes, norms and values. It follows then that cultural dissimilarity may correspond with social and/or institutional dissimilarity. Extending the analysis presented in Chapter 6, we decompose our measure of cultural distance to examine the relative influences of the component dimensions, ‘Traditional authority vs. Secular-Rational authority’ (TSR) and ‘Survival values vs. Self-Expression values’ (SSE), on trade flows between the US and the immigrants’ respective home countries. Confirming the results presented earlier, we report that cultural distance inhibits trade flows, that immigrants exert positive influences on trade between the US and their respective home countries, and that these pro-trade influences partially offset the influence of cultural distance. Extending the literature, we find that differences in the TSR dimension of culture inhibit US–home country trade while differences in the SSE dimension reduce US imports levels and increase US exports. While immigrants ameliorate the trade-inhibiting influences of both dimensions...
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