Impact Of Culture On Trade

As a systematic project promoted by China’s top-level,the Belt and Road initiative has pinpointed the good intentions of policy communication,facilities,trade,finance,and public sentiment among different countries and peoples.It is a specific practice of the"going out" strategy for China.The smooth flow of trade,as an important part of the "five links," requires the understanding,acceptance,and adaptation of each other’s culture in addition to the need to break through various explicit or implicit institutional barriers.One of the most basic directional issues is whether cultural differences have a positive or negative impact on trade.Under the background of the Belt and Road initiative,it is of urgent and realistic significance to examine whether there are and particularities in cultural and export issues along the Belt and Road region.Based on the gravity model and relying on Hofstede’s value theory and related data of the Confucius Institute,this paper empirically analyzes the influence of culture on China’s exports to countries along the Belt and Road from the perspective of cultural distance and language.First,from the perspective of cultural distance,this paper selects the four dimensions of Power Distance(PDI),Individualism(IDV),Masculinity(MAS)and Uncertainty Avoidance(UAI)in Hofstede’s value evaluation system.The synthesis method of Kogut and Singh(1988)is then deployed is to synthesize the four cultural dimensions by standardization.Through regression analysis,we found that under the whole sample,the cultural distance is significantly negatively related to China’s export trade volume.This shows that in international trade,other countries generally prefer to import from countries with similar values.However,under China’s export sample to countries along the Belt and Road,this phenomenon is not significant.Next,in order to further confirm whether culture has a significant impact on China’s exports under the Belt and Road context,we choose from the perspective of the Confucius Institute whether or not Confucius Institutes and Confucius Institutes have been established for two years to serve as agents for the dissemination of Chinese culture.Variables are examined through ordinary regression models.Additionally,since the establishment and export of the Confucius Institute can be considered approximately as a social experiment,models are also tried keeping variables other than culture(economic,geographic,and governance dimensions)controlled and employing Mahalanobis distance to pair samples.The control and experimental groups were selected and the robustness test of the original results was performed using the Difference in Difference model.We have found that as a special carrier for the export of language and culture in China,the Confucius Institute has no significant contribution to China’s export trade compared to other factors under the full sample or the Belt and Road sample.Comparing the performance of the culture under the full sample and the Belt and Road sample,we believe that both the cultural distance and the Confucius Institute have no significant impact on China’s exports to countries along the Belt and Road.Based on this,we speculate that,with geographical distance put aside,in the Belt and Road context,economic and other factors are the driving force behind the scenes,and its role played in China’s export at the current stage may be even more pronounced;In the field of trade,Belt and Road,as China’s grand initiative,has embodied China’s economic influence as the world’s second-largest economy.The role of culture in this area is still vast.On one hand,attention should be paid to adapting goods in export to the culture of the target country to narrow the cultural distance.On the other hand,starting from the cultural affinity and influence,appropriate efforts should be made to let people in target countries understand and identify Chinese culture better.In time,culture may be able to become a new and important engine for the landing of the Belt and Road initiative in the later stages and the prosperity of China’s economic and trade cooperation.