Cultural Barriers and Agricultural Trade in the Western Hemisphere
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This study analyzes the impacts of cultural distance on bilateral trade flows in the Western
Hemisphere using a Fixed Effects Vector Decomposition (FEVD). Four cultural dimensions
of Hofstede are used to capture cultural distance. The results found that the effects of each
dimension vary considerably with three of four dimensions (UAI, PDI, and MFI) have a
negative impact and one dimension (ICI) has a positive effect. The magnitude of ICI is large
enough to offset the negative effects of the other three dimensions resulting in a net positive
effect of cultural distance, suggesting that culturally-dissimilar countries trade more than less.