Cultural Similarity and International Trade in a Panel of Nations

Using a gravity model and the data of a panel of eight nations, we present evidence that supports the views that geographical influence on trade had increased from 1985 to 1997. In both years, linguistic influence on trade is found to exist in export but not in import. The estimated results show a positive relation between religious similarity and international trade for the year 1985 but not for the year 1997. However, there is an indication that, for 1997, the religious dissimilarity tends to retard international trade with low-income countries and regions and to encourage international trade with high-income places. We also find that, for low-income trade partners, religious dissimilarity retards imports more than exports; by contrast, for high-income trade partners, it encourages exports more than imports.