The Influence Of Cultural Distance On Bilateral Trade In Goods

Influenced by traditional cultural values,China’s economic development has long valued industry over service industry,which makes goods trade play an important role in China’s foreign trade.Since the reform and opening up,China has vigorously promoted the development of goods trade,and has become a large country of goods trade.In 2018,the total volume of China’s foreign trade in import and export goods is about $4.62 trillion,more than five times of the total volume of foreign trade in import and export services,accounting for 85%of foreign trade.Therefore,it is necessary to investigate the obstacles and challenges that may be encountered in the development of goods trade.In the past literature review process,it is found that scholars mostly study the impact of "tangible factors" such as population,geography and economy on goods trade.However,with the progress of science and technology,the improvement of infrastructure construction,economic globalization and the in-depth development of global value chain division,the impact of these "tangible factors" on goods trade has gradually decreased.On the contrary,in the construction of the existing international economic and trade system,culture and other"intangible factors"have more and more significant influence on the trade of goods,and are widely concerned.At present,China has carried out trade in goods with more than 100 countries.However,there are differences in economy,politics,system and culture among trade partners,which hinder the development of bilateral trade in goods.In the nineteen major reports of the Communist Party of China,general secretary Xi Jinping pointed out:we should promote the development of cultural undertakings,enhance our international communication ability,and enhance our country’s cultural soft power.The promotion of the international communication ability of Chinese culture is conducive to strengthening the understanding of Chinese culture and enhancing the sense of identity of products in the trade of goods,so as to promote the increase of bilateral trade flow of goods.Then,through what channels does cultural difference affect the import and export trade between China and its trading partners?To what extent do cultural differences affect the smooth flow of bilateral trade in goods and what is the direction of their influence?This paper attempts to answer this question through the quantitative analysis of cultural differences through cultural distance.The specific content is as follows:First of all,based on relevant theories,the second chapter summarizes the path of cultural distance influencing bilateral trade in goods,and finds that cultural distance influences bilateral trade in goods mainly through four aspects:transaction cost,demand preference,comparative advantage formation and complementary trade development.Secondly,based on the six dimensions of Hofstede culture,the third chapter describes the cultural characteristics of China,the cultural distance between China and the sample countries,and divides the current situation and challenges of China’s foreign trade in goods from three aspects:the current situation of China’s foreign trade in goods,the current situation of China’s foreign trade in goods and the international environment of China’s foreign trade in goods Analysis.Then,the fourth chapter makes an empirical test on the relationship between cultural distance and bilateral goods trade.Using the trade gravitation model,introducing the cultural distance and other related variables,this paper constructs the econometric analysis model.Based on the data of bilateral goods trade between China and 57 sample countries from 1998 to 2018,this paper empirically discusses the influence of cultural distance on bilateral goods trade by using the least square dummy variable estimation method of two-way fixed effect.The results show that:the overall cultural distance has a significant inverted U-shaped relationship with the bilateral trade flow of goods,and its influence on the import trade is greater than that on the export trade;The influence of sub dimension cultural distance on bilateral goods trade flow is different in different cultural dimensions.Some cultural dimensions show inverted U-shaped relationship with bilateral goods trade flow,some show positive U-shaped relationship,some show positive correlation.Cultural distance has an inverted U-shaped relationship between China and the sample countries with different income levels,but the impact of cultural distance on the bilateral goods trade between China and the sample countries with low and middle income levels is greater than that with the sample countries with high income levels.Finally,the fifth chapter is the main conclusions and suggestions.Based on the analysis of the above chapters,this paper summarizes the main conclusions of this paper,and puts forward corresponding countermeasures and suggestions for the development of China’s foreign trade in goods from the perspectives of government and enterprises.Compared with the previous literature,the innovation of this paper is as follows:first,two methods are used to measure the cultural distance,and the variable of "year of establishment of diplomatic relations" is added to the measurement,which makes up for the defect that the index data of Hofstede’s cultural dimension does not change with time,resulting in the lack of reflecting the trend and details of cultural differences changing with time.Secondly,this paper describes the influence of cultural distance on bilateral goods trade from multiple perspectives,enriching the existing research.