Dialects And Intra-national Trade

China's history and geography have nurtured a variety of regional cultures and dialects on the one hand;and have contributed to China's huge economic volume and regional economic structure that is both fragmented and integrated on the other.The trade barriers that prevail among different regions provide us with a spatial structure similar to international trade.This article links these two phenomena and focuses on the impacts of dialects and regional culture on intra-national/inter-regional trade.Theoretically,this paper proposes a complete causal chain of dialects affecting intra-national/inter-regional trade:Migration history ? Dialect geography ? Regional culture ? Inter-regional trust ? Inter-regional tradeThe migration history determines the dialect geography.The effects of dialects on intra-national/inter-regional trade reflect its regional-cultural dimension.The regional culture ultimately affects the inter-regional trade of firms by shaping inter-regional trust.On the “downstream” of the effect,dialects and regional culture have an impact on the regional economy through trust mechanism: on the one hand,dialects and regional culture will shape inter-regional trust,which is the first part of the trust mechanism;on the other hand,inter-regional trust can alleviate the incompleteness and asymmetry of information between traders,overcome the moral hazard problem in transactions,reduce transaction costs,and thus affect the cross-regional trade of firms.This is the second part of the trust mechanism.On the “upstream” of the effect,the regional economic consequences of dialects can be regarded as a long-term impact of large-scale migration in history.The migration history is the deep historical root of the regional economic consequences of dialects.On the basis of the theoretical analysis,this article puts forward several testable hypotheses.Using various datasets on dialects,migration history,inter-regional trust and inter-regional trade,we test the hypotheses and provide solid and complete evidence for the theoretical analysis through empirical research design and econometric methods.This article shows that:Firstly,the regional-cultural differences represented by the dialect distances are important factors affecting Chinese firms' cross-regional trade.The dialect differences have a significant negative impact on firms' cross-regional trade: other things equal,the increase of the dialect distance significantly reduces the probability of firms' crossprovincial sales,that is,firms are more inclined to enter the market whose dialects and culture are close to their own location.Secondly,controlling the effects of Chinese Mandarin and narrowing the scope of the sample to the northern dialect area,we find that dialects still have a significant negative impact on firms' cross-regional trade,thus verifying that the dialect's impact on inter-regional trade is achieved through the “cultural effect”,which means that on the background of the popularization of Chinese Mandarin,the dialect differences are unlikely to constitute a language barrier for firms' market expansion,while the cultural differences and psychological distances reflected in dialects and accents can affect firms' cross-regional trade as intangible transaction cost.Thirdly,based on the literature of historical geography and Chinese linguistics,we verify the migration history as historical roots of the dialect's regional economic consequences start in two ways from the perspective of the decisive influence of migration history on the modern Chinese dialect geography.First,we focus on the case of the migration history of “Chuang Guandong”.And then,we construct large-scale cross-provincial historical migration as instrumental variables of dialect distance,according to the records and research on large-scale migration in the historical literature.IV results show that historical migration affects the behavior of today's firms by shaping dialects and regional culture,and dialects and regional cultures are the main channels of the effects.Therefore,the effects of dialect differences on cross-regional trade can be regarded as long-term effects of large-scale migration in history.The migration history is the historical roots of the regional economic consequences of dialects.Fourthly,regional culture is an important factor affecting the establishment and formation of inter-regional trust.Other things equal,the larger the dialect distance between the county where the firm is located and the province where the firm's largest business partner is located,the lower the level of trust to the province by the firm.That is,controlling the geographical factors and the objective characteristics of the specific province market,the regional culture represented by dialects still has a significant negative impact on the bilateral trust between regions.This shows that regional culture is indeed an independent factor that shapes the bilateral trust between regions,thus verifying the first part of the trust mechanism of the dialect's regional economic consequences.Fifthly,this article shows that inter-regional trust has a significant positive impact on cross-regional trade of firms,which provides direct evidence for the second part of the trust mechanism.In addition,we examine the heterogeneity of the effects of dialects and regional culture on cross-regional trade from the perspectives of customization and market reputation mechanism.Empirical results show that firms with higher levels of customization are more sensitive to dialects and regional culture,which means that dialects and regional culture will affect cross-regional trade through trust mechanisms,since customized products are trust-intensive.Two typical market reputation mechanisms,advertising strategies and industry associations,and dialects and regional culture have significant substitutive effects on cross-regional trade,which means that the impacts of dialects and regional culture on cross-regional trade is achieved through channels of trust,since the main function of these two market mechanisms is to promote the establishment of commercial trust.Therefore,the analysis based on customization and market reputation mechanism provides indirect evidence for the trust mechanism.