Cultural Proximity and Trade

Gabriel Felbermayr (1) , Farid Toubal (2, 3)

1 CESifo
2 CES - Centre d'économie de la Sorbonne
3 PSE - Paris School of Economics

Cultural proximity is an important determinant of bilateral trade volumes. However, empirical quantification and testing are difficult due to the elusiveness of the concept and lack of observability. This paper draws on bilateral score data from the Eurovision Song Contest, a very popular pan-European television show, to construct a measure of cultural proximity which varies over time and within country pairs, and that correlates strongly with conventional indicators. Within the framework of a theory-grounded gravity model, we show that our measure positively affects trade volumes even if controlling for standard measures of cultural proximity and bilateral fixed effects.

Mots clés: International trade; Gravity equation; Cultural proximity; Eurovision song contest

Domaines: Economies et finances

Gabriel Felbermayr, Farid Toubal. Cultural Proximity and Trade. European Economic Review, 2010, 54, pp.279-293. ⟨10.1016/j.euroecorev.2009.06.009⟩. ⟨halshs-00641280⟩