Impact of national culture on trade in the European Union : what is the impact of differences in nationalism and environmental concern between countries on trade in the European Union?

(1)

1

Impact of national culture on trade in the European Union

What is the impact of differences in nationalism and environmental concern between

countries on trade in the European Union?

Bachelor Thesis

Economics and Business Economics

Student: Marion van Wee

Student number: 10974202 Supervisor: C. W. Haasnoot

(2)

2

Abstract

The gravity model of trade typically includes the variables GDP and distance between countries to explain trade. In recent years, research is done which finds that culture has also impact on trade, so in this paper the gravity model of trade will be expanded with the cultural variables nationalism and environmental concern. With data from the World Values Survey on these cultural variables, there is tested if differences in nationalism and environmental concern between countries have an impact on trade in the European Union. It finds that differences in nationalism have a positive impact on trade and that there are more significant cultural variables when looking at these variables per country, separately.

Statement of Originality

This statement is written by Student Marion van Wee who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The faculty of Economics and Business is responsibly solely for the supervision of completion of the work, not for the contents.

(3)

3

1. Introduction

With the Single Market Project in 1992 and the beginning of the Economic and Monetary Union in 1999 the European Union became more integrated. This project and union removed borders with paperwork, created a common currency between members of the eurozone and removed their exchange rate variations (Allington, Waldmann, & Kattuman, 2004).

Because of globalization, European integration and free-trade agreements one might think that national borders have little or no impact on trade (Cyrus, 2015). But the paper of Nitsch (2000) finds that national borders within the European Union still affects trade patterns. With these findings, you may also say that cultural distance between countries affect trade. The paper of Luigi Guiso, Paola Sapienza and Luigi Zingales (2009) finds that lower bilateral trust leads to less trade, portfolio investment and direct investment between countries. Which suggests that cultural aspects have an impact on economic exchange. Also, the paper of Cyrus (2015) discussed if differences in trust, respect, control and obedience between countries affect trade. These papers suggest that culture has an impact on international trade.

To analyze the movements of trade the gravity model of trade is typically used. Trade is in this model usually explained by the variables GDP and distance between countries (Bergstrand, 1985). These are very logical variables to have an impact on trade but it does not completely explain international trade flows (Linders, Slangen, De Groot, & Beugelsdijk, 2005). Also, the paper from Anna Maria Mayda and Dana Rodrik (2005) says that it is important to consider economic and non-economic factors to determine trade. So, maybe culture should be part of the trade model. A nation’s culture is defined by White and Tadess (2008) as a "population's shared habits and traditions, learned beliefs and customs, attitudes, norms and values.” So, culture is rather broad. With the Brexit and influence of Geert Wilders, nationalism is a subject that is common in

newspapers. Nationalism is universal, and England is driving on hers to become an independent nation (O’Toole, 2016). Geert Wilders, a Dutch politician, is getting more attention in the media because of his nationalistic statements (Goldman, 2017). Then in 2016, the Netherlands had to vote on the Ukraine referendum. An import counterpoint against this referendum was the lack of environmental laws (Heck, 2016). Because of the attention for these matters in recent years, this thesis focusses on the cultural aspects of nationalism and environmental concern and how they impact trade in the European Union. Hence, the research question of this thesis is: ‘What is the impact of differences in nationalism and environmental concern between countries on trade in the European Union?’

First a literature review will be given with more information about the gravity model of trade, cultural impact on trade and the possible impact of nationalism and environmental concern

(5)

5 on trade, then several hypotheses will be discussed, thereafter the data and methodology will be presented, subsequently the results and analyses will be discussed and finally a conclusion and discussion will be given.

2. Literature Review

In this section the gravity model of trade, the impact of culture on trade and the impact of nationalism and environmental concern on trade is discussed based on existing literature. Also, hypotheses will be given on the impact on trade by the total effect of culture, two nationalistic countries, two less nationalistic countries, nationalistic different countries, two environmental concerned countries, two less environmental concerned countries and finally on countries who differ in environmental concern.

2.1 Gravity Model of Trade

The Gravity Model of Trade explains international trade flows with the variables of GDP of country i and j, together with the distance between county i and j. The gravity model of trade is:

𝑃𝑋𝑖 𝑗= 𝛽0(𝑌𝑖)𝛽1(𝑌𝑗) 𝛽₂ (𝐷𝑖 𝑗) 𝛽₃ (𝐴𝑖 𝑗) 𝛽₄ 𝑢𝑖𝑗 (2.1)

𝑃𝑋𝑖 𝑗 is export from a country to another, 𝑌𝑖 (𝑌𝑗) is the GDP of countries, 𝐷𝑖 𝑗 is the distance between countries, 𝐴𝑖 𝑗 is any other factor that can have impact on trade and 𝑢𝑖𝑗 is the log-normally distributed error term (Bergstrand, 1985).

Model 2.1 suggests that higher GDP’s of countries attract trade, and that when distance between countries increases, trade is less attractive. This model is used worldwide because it provides a good fit to regional and international trade flows data and is mostly used in empirical research in international trade (Helpman, Melitz & Rubinstein, 2008).

GDP and distance explain a lot of trade patterns between countries but there are still other variables that can have impact on trade. When adding more variables to the model, more

information can be provided on why countries trade with each other (Linders et al., 2005).

2.2 Cultural Impact on Trade

Trade can be impacted by GDP and distance but it does not completely explain international trade flows. Trade can be impacted by unobservable factors like cultural and institutional differences between countries. These differences give firms an incomplete information about their foreign competitors, which may lead to additional trade costs (Linders et al., 2005).

(6)

6 Marcouiller (2002), Frankel and Rose (2002) and Luigi Guiso, Paola Sapienza and Luigi Zingales (2009) found that the variables common language, religion and colonial past have a significant impact on trade. So, they found common variables between countries that have an impact on trade. When there is cultural similarity it is easier to communicate and share information. However, these studies say nothing about the impact of cultural differences on trade.

Cultural differences means the level of differences in shared norms and values between countries (Linders et al., 2005). Studies from Hutchinson (2005), Cyrus (2015) and Hajikhameneh and Kimbrough (2017) looked at impact of differences in languages, individualism/collectivism, trust, respect, control and obedience on trade. It turns out that differences in languages reduce trade and that individualist seek out trade more. The variables trust, respect, control and obedience have a positive but not significant effect on trade, this was due to a problem of endogeneity.

A paper from Kogut and Singh (1988) discussed if national culture has an impact on selection of entry modes. Basing on cultural distance and attitudes towards uncertainty avoidance between countries, they found empirical support for the effect of national culture on entry choice.

These papers suggest that culture variables have an impact on trade, but there are still many variables which could have an impact on trade where research can be done on. It is generally known that large cultural differences make communication difficult and raises the costs of international trade. There is a negative correlation between cultural differences and economic exchanges (Linders et al., 2005). So, I expect that differences in national culture will have a negative impact on trade in the European Union.

2.3 Nationalism on Trade

The last paragraph showed that there are multiple factors in a national culture that can affect trade. But there are still other national culture factors that might impact trade. One of them is nationalism. Nationalism is defined by Stephen Shulman (2000) as “the promotion of the autonomy, unity, and identity of the nation.” A nation is then, a community of people who share culture, territory, destiny, ancestry and history. Someone who is a nationalist believes that a nation exists and that it must be independent and the priority. Some countries are more nationalistic than others. Individuals who have high attachments to their community, are proud of their nation and see their country as priority are more in favor of trade restrictions (Mayda & Rodrik, 2005). When countries are more nationalistic they are likely to be against free international trade, interdependence, globalization and foreign investment (Shulman, 2000). They avoid the free trade to preserve their nation’s cultural identity and educate their country in their cultural correct way, also they are afraid that their cultural relevant products and services might vanish and want to protect their infant industries (Nielsen, 1979). Thereby nationalists do not want foreign countries to exploit their nation.

(7)

7 Costs of being a nationalist in a globalized world is a lower level of economic wealth than a less nationalistic country, but nationalists see the satisfaction of being a ‘nationalist’ as psychic income. (Shulman, 2000).

When countries are less nationalistic they see free international trade as helping the flow of ideas and cultures between countries together with the improvement of their countries economic comparative advantage (Nielsen, 1979). Less nationalistic countries might be protecting their

country more than a nationalistic country. When you are pro globalization and economic integration your country will be wealthier. Being wealthy is important in an internationalized world. So, a strong economic country will be more able to protect its nation from foreign threats than a country who is against globalization and economic integration (Shulman, 2000).

2.3.1 Hypothesis Nationalism

Nationalism can mean that individuals want to protect their country (Mayda & Rodrik, 2005). Therefore, they want to avoid free international trade to preserve their nation’s cultural identity (Nielson, 1979). So, it is expected that if two countries are nationalistic, there is less cultural distance between these countries. But because nationalistic countries are expected to be against trade, trade between two nationalistic countries will be low. So, the import and export between these countries will be low.

On the other hand, because of globalization a country can gain economic outcomes with international trade. So, it might be possible that nationalism is positive correlated with international trade, meaning that individuals who have an interest in their countries wellbeing should be pro free international trade.

When individuals are less nationalistic they are more in favor of free trade (Mayda & Rodrik, 2005). This makes less nationalistic countries more pro free international trade (Nielson, 1979). So, it is expected that if two countries are less nationalistic there is less cultural distance. And because they are pro trade, import and export between these countries will be high.

If a nationalistic country wants to trade with a less nationalist country conflicts may arise. Differences between national cultures usually has a negative impact on trade. Because of

miscommunications these countries might trade less (Linders et al., 2005). Therefore, it is expected that there will be less import and export between countries when the differences in nationalism are high.

2.4 Environmental Concern on Trade

Free trade and a healthy environment are two important factors for social welfare. But pursuing both goals might conflict (Fletcher, Weissler, & Sobin, 1993). Politics have tried to develop laws to protect the environment and pursuing free trade. These laws are applied for the production process

(8)

8 and product. Consumers and producers need to pay for their polluting activities. Some free traders are afraid that regulations will lead to more closed markets and at the other side, environmental advocates fear that environmental protection laws on free trade will create competitiveness

pressures which will make it hard to follow these laws (Esty & Geradin, 1997). In the past, free trade and environmental protection were seen as two different subjects, but now it is seen as two

variables that have an impact on each other (Porras, 1995).

Environmental organizations suppose a negative correlation between free trade and

environmental protection. Free international trade results in an increase of energy consumption and air pollution, this is a reason for environmental concerned nations to be against free trade (Heerink, Kuik, 1994). Open countries who are more concerned with economic growth than environmental protection might deal with the ‘race to the bottom’ hypothesis. This hypothesis is the basis of environmental concerned countries to be against international trade.

The race to the bottom hypothesis refers to the negative effects that arise when an open country is afraid of international competition and therefore invest less in environmentally conscious machines. When changes in domestic regulations lead to an increase in costs of companies, these companies are afraid of losing their international position, so they invest in cheaper and less environmental concerned ways to operate their firm. When multinational firms are being set up, they are more concerned about labor costs and market access then the protection of the

environment (Frankel, 2008). Countries who have a low valuation for the protection of the

environment have a comparative advantage, they can invest in producing a pollution-intensive good (Perroni & Wigle, 1994).

2.4.1 Hypothesis Environmental Concern

When countries are environmental concerned they might be against free international trade, because this results in an increase of energy consumption and air pollution (Heerink & Kuik, 1994). This can lead to more environmental laws which can decrease the volume of trade (Fletcher et al., 1993). When two countries are environmental concerned there are less cultural differences, so it is expected that export and import between these countries are high, because they agree on the way they want to trade. But the export and import is expected to be lower than when two countries who trade are not environmental concerned, because these countries have less environmental rules so they can focus more on the economic growth (Frankel, 2008).

When a country who is environmental concerned trades with a country who is not, conflicts may arise (Fletcher et al., 1993). Due to cultural differences, the concerning countries do not have the same view on the need to protect the environment and the countries could disagree on the way they want to operate. One might want to use cheaper polluting machines while the other wants to

(9)

9 use expensive non-polluting machines. So, it is expected that export and import between countries with different believes about environmental concerns will be low.

3. Data and Methodology

3.1 Data

3.1.1 Cultural Variables

To find data about the level of nationalism and environmental concern about a country the World Values Survey (2017) is used. World Values Survey helps social scientists to study changes in values, beliefs and motivations of people in the world. It provides data over almost 100 countries which covers around 90 percent of the world’s population. They provide data of six different waves (1981-1984, 1990-1994, 1995-1998, 1999-2004, 2005-2009, and 2010-2014). To get data about values, beliefs and motivations of people they use a questionnaire. World Values Survey is the largest survey in the world in its area.

The World Values Survey is used for this thesis to define the level of nationalism and

environmental concern of countries in the European Union. The countries that are available in World Values Survey and that are part of the European Union are: Cyprus, Estonia, Germany, Netherlands, Poland, Romania, Slovenia, Spain and Sweden. To estimate for recent times data from the last wave, 2010-2014, is used. The survey is taken one time between the wave but countries took the survey in different years. In 2011 Cyprus, Estonia, Slovenia, Spain and Sweden took the survey. The

Netherlands, Poland and Romania took it in 2012 and Germany in 2013. Because culture does not change much in a timeframe of four years the data will be analyzed as if the concerning countries have taken the survey in the same year (Guiso, Sapienza, & Zingales, 2006).

To define the level of nationalism about a country the following questions from their questionnaire are used.

- How proud are you to be [Nationality]?

Possible answers: Very proud, Quite proud, Not very proud, not at all proud, no answer, don’t know.

- When jobs are scarce, employers should give priority to people of this country over immigrants.

(10)

10 - Of course, we all hope that there will not be another war, but if it were to come to that,

would you be willing to fight for your country?

Possible answers: Yes, No, No answer, don’t know.

- I see myself as part of the [your country] nation

Possible answers: Strongly Agree, Agree, Disagree, Strongly disagree, No answer, Don’t know.

To define the level of environmental concern about a country the following questions from their questionnaire are used:

- Here are two statements people sometimes make when discussing the environment and economic growth. Which of them comes closer to your own point of view?

1. Protecting the environment should be given priority, even if it causes slower economic growth and some loss of jobs.

2. Economic growth and creating jobs should be the top priority, even if the environment suffers to some extent

Possible answers: 1, 2, Other answer, Don’t know.

- Now I am going to read off a list of voluntary organizations. For each organization, could you tell me whether you are an active member, an inactive member or not a member of that type of organization: Environmental organization

Possible answers: Not a member, Inactive member, Active member, Don’t know.

- During the past two years have you participated in a demonstration for some environmental cause? ‘

Possible answers: Yes, No, No answer, Don’t know.

- I am going to name a few organizations. For each one, could you tell me how much confidence you have in them: is it a great deal of confidence, quite a lot of confidence, not very much confidence or none at all: Environmental organizations

Possible answers: A great deal, Quite a lot, Not very much, None at all, No answer, Don’t know.

- During the past two years have you given money to an ecological organization?

(11)

11 Some individuals who answered the questionnaire didn’t answer to a few concerning

questions or took the option ‘I don’t know the answer’ on a question. These answers are not useful for this thesis so these are distracted from the data and a new percentage is calculated for these questions.

Because there are many questions where individuals had to answer in intensity of valuation. The weighted average was taken for these questions. So, for example by the question ‘How proud are you to be [Nationality]?’ the weighted average was calculated by: (10*Very proud + 7.5*Quite proud, 5*Not very proud, 2.5*Not at all proud)/N. All the questions are weighted on the same scale. Then to find the differences in the national culture the weighted answer from 𝐶𝑜𝑢𝑛𝑡𝑟𝑦𝑗 is subtracted from 𝐶𝑜𝑢𝑛𝑡𝑟𝑦𝑖, where the absolute value is taken from. The total differences of level of nationalism and/or environmental concern is calculated by taking the root of the sum of the squared differences between countries. The sum involves only the concerning questions (Cyrus, 2015). 3.1.2 GDP and GDP per capita

Data of GDP and GDP per capita is provided by the World Bank (2017). The World Bank provides free and open access to global development data. For nine European Union countries in the timeframe 2010-2014 the following data is extracted: their GDP (Constant 2010 US$) and their GDP per capita (Constant 2010 US$).

Because there is only data available of nationalism and environmental concern on one year per country and we generalized this data for the period 2010-2014, the mean of GDP and GDP per capita data in this period will be used.

3.1.3 Export and Import

The International Monetary Fund (IMF) (2017) publishes data on economic and financial indicators. From their global database ‘Direction of Trade statistics (DOTS)’ the data from import and export to and from nine European countries in the timeframe 2010-2014 is extracted. Import in DOTS are reported on cost, insurance and freight basis and export on a free on-board basis.

Normally it is assumed that between partner countries data from import and export are consistent. But this is not the case in DOTS because of the inclusion of insurance and freight in import data. Data between partner countries can be inconsistent because of differences in classification concepts and detail, time of recording, valuation, coverage and processing errors. The same as GDP and GDP per capita the data of export and import is generalized for the timeframe, the mean of this period is used for export and import.

(12)

12 3.1.4 Distance

Distance between the concerning countries is measured by the great circle distance. Great circle distance is the distance between two points on the earth’s surface (Zar, 1989). This data is provided by distancefromto (2018) in kilometers.

3.2 Methodology

To measure the impact of differences in national culture with the variables nationalism and

environmental concern on trade the gravity model is used (Bergstrand, 1985). Because the mean of all the data is taken, the period is generalized. Therefore, a simple linear regression is used. One of the gravity model that will be used in this thesis is:

𝐿𝑛(𝐸𝑥𝑝𝑜𝑟𝑡𝑠𝑖𝑗) = 𝛽0+ 𝛽1𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒𝑠 𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑢𝑙𝑡𝑢𝑟𝑒𝑖𝑗+ 𝛽2ln(𝐺𝐷𝑃𝑖) + 𝛽3ln(𝐺𝐷𝑃𝑗) +

𝛽4ln(𝐷𝑖𝑠𝑡𝑎𝑛𝑐𝑒𝑖𝑗) + 𝛽5ln(𝐺𝐷𝑃 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑖) + 𝛽6ln(𝐺𝐷𝑃 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑗) (3.1)

To find an answer on the research question there will be regressions with cultural distances of the questions individual in the model, all of them in one model and the total of nationalistic questions and environmental concerned questions in one model. These regressions will be done on the dependent variables of the Natural logarithm of export and import.

Then a second model is used to determine the impact of cultural variables of country i and j on export or import of country i to country j. the second model is:

L𝑛(𝐸𝑥𝑝𝑜𝑟𝑡𝑠𝑖𝑗) = 𝛽0+ 𝛽1𝐶𝑢𝑙𝑡𝑢𝑟𝑎𝑙 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒𝑖 + 𝛽2𝐶𝑢𝑙𝑡𝑢𝑟𝑎𝑙 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒𝑗+ 𝛽3ln(𝐺𝐷𝑃𝑖) +

𝛽4ln(𝐺𝐷𝑃𝑗) + 𝛽5ln(𝐷𝑖𝑠𝑡𝑎𝑛𝑐𝑒𝑖𝑗) + 𝛽6ln(𝐺𝐷𝑃 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑖) + 𝛽7ln(𝐺𝐷𝑃 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑗) (3.2)

With this model cultural variables of the questions are also regressed individual in the model, all of them in one model and the total of nationalistic questions and environmental

concerned questions in one model. And these regressions will be done on the dependent variables of the Natural logarithm of export and import.

Because there is only data available of nine countries, so there is a lack of data, the variables are tested for significance at a level of 10, 5 and 1 percent.

(13)

13 jobpriority1 -0.4519 -0.3650 0.2100 0.2007 0.1447 -0.5756 0.1407 -0.8285 0.0085 -0.0794 1.0000 confidence~1 0.0630 0.1511 0.1668 0.7981 -0.1913 0.6154 0.2729 0.0150 -0.0576 1.0000 participat~1 0.0564 0.1312 -0.0824 0.1053 0.2865 -0.3215 -0.0649 -0.1976 1.0000 moneyeo1 0.3819 0.1993 0.0874 -0.2860 -0.2530 0.6803 0.1781 1.0000 activeeo1 -0.1884 -0.1367 0.3992 0.1085 0.1427 0.3565 1.0000 environment1 0.2570 0.1716 0.2308 0.2694 -0.3193 1.0000 nationalism1 -0.0370 0.0605 0.2543 0.3024 1.0000 nation1 0.0318 0.1185 0.3877 1.0000 fight1 0.0820 -0.0924 1.0000 distancena~l 0.4329 1.0000 distanceen~l 1.0000 d~etotal d~mtotal fight1 nation1 natio~m1 enviro~1 active~1 moneyeo1 partic~1 confid~1 jobpri~1

4. Results and Analysis

In this part, the results of the correlations and regressions are showed and analyzed. The meaning of the variables in the tables can be found in table A in the appendix.

4.1 Correlations

In table 4.1 below you can see the correlations between cultural variables. Some are very correlated bus most of them are low correlated. Some correlations that are not expected are between having confidence in environmental organizations and feeling part of your nation (0.80). It was not expected because it is a correlation between an environmental concern and a nationalistic variable.

Secondly, there is a correlation between having confidence in environmental organizations and the need to protect the environment (0.62). These are both environmental concerned variables, so it can be logic that these variables have a positive correlation.

Thereby, there are some strong negative correlations between giving job priority to people of your nation and the variables: giving money to environmental organizations (-0.83) and the need to protect the environment (-0.58). So, this nationalistic variable has a negative impact on these environmental variables.

Finally there is a high correlation between wanting to protect the environment and giving money to environmental organizations (0.68). A correlation that is logic, because when you want to protect the environment, you are more likely to donate money to environmental organizations.

Table 4.1

(14)

14

4.2 Level of Nationalism and Environmental Concern Between Countries

In the figure 1 and 2 the level of nationalism and environmental concern between countries is showed. You can see the level by the questions for nationalism and environmental concern: ‘How proud are you to be [Nationality]?’, ‘I see myself as part of the … nation’, ‘participation in

environmental demonstrations’ and ‘protecting the environment VS. economic growth’.

In figure 1 you can see the level of nationalism of the concerning countries. You see that Poland, Spain and Cyprus are more nationalistic and that the Netherlands and Germany are less nationalistic. You can also see that Estonia is less proud to be an Estonian.

In figure 2 you can see the level of environmental concern of the concerning countries. You see that Sweden is very concerned about the environment and that Poland and the Netherlands are less concerned about the environment. Also, Romania and Spain participate a lot in environmental demonstrations.

Figure 1

(15)

15

Figure 2

Scatterplot between the questions ‘Participation in environmental demonstrations’ and ‘protecting the environment’ in percentages

4.3 Regressions

As expected from the literature review on the gravity model of trade, GDP has a positive impact on export/import and distance a negative impact in both models used. First the impact of differences in cultural variables on export and import of equitation 3.1 is discussed and then the cultural variables of equitation 3.2.

4.3.1 Gravity Model 3.1

4.3.1.1 Individual Regressions on Export

In table 4.2 and 4.3 below, export is being explained by all the distances in cultural variables individually. Some of these distances are significant. These are the variables distance of feeling proud of your country and distance of willingness to fight for your country. These nationalistic variables are significant at a 10 percent significance level and have a positive impact on export. This implies that when there are more differences in nationalism between countries, export is higher.

(16)

16

Table 4.2

(17)

17

Table 4.3

The impact of individual cultural distances on export

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9279 0.9298 0.9264 0.9294 0.9271 0.9258 N 72 72 72 72 72 72 (-10.85) (-11.11) (-10.56) (-8.53) (-8.85) (-10.37) _cons -31.34*** -31.27*** -30.29*** -27.54*** -28.79*** -30.58*** (-0.13) dis~etotal -0.0122 (1.07) dis~mtotal 0.0852 (1.82) distanc~ht 0.147* (0.68) distance~n 0.171 (1.92) distance~m 0.371* (-1.38) distanc~nt -0.170 (-9.66) (-9.63) (-9.65) (-9.56) (-9.37) (-9.59) lnDistance -1.556*** -1.536*** -1.575*** -1.716*** -1.635*** -1.566*** (2.13) (2.20) (1.89) (2.21) (1.84) (2.00) lnGDPp~2_M 0.348** 0.355** 0.316* 0.358** 0.306* 0.340** (-1.02) (-1.00) (-1.19) (-0.97) (-1.26) (-1.04) lnGDPp~1_M -0.167 -0.161 -0.199 -0.157 -0.209 -0.176 (12.64) (12.72) (12.47) (10.64) (11.79) (12.39) lnGDP2_M 0.726*** 0.711*** 0.716*** 0.663*** 0.696*** 0.713*** (18.96) (19.22) (18.79) (16.47) (17.94) (18.69) lnGDP1_M 1.089*** 1.074*** 1.079*** 1.026*** 1.059*** 1.076*** LnExpor~M LnExpor~M LnExpor~M LnExpor~M LnExpor~M LnExpor~M (1) (2) (3) (4) (5) (6)

(18)

18 4.3.1.2 Individual Regressions on Import

Secondly a regression is done with the dependent variable import. The results are shown in table 4.4, 4.5 and 4.6 below. The only distance of cultural variable that is significant is: ‘being proud of your country’ at a 10 percent significance level. This variable has a positive impact on import. This implies that differences in nationalism increase import.

Table 4.4

(19)

19

Table 4.5

The impact of individual cultural distances on import

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9487 0.9497 0.9471 N 72 72 72 (-13.58) (-13.82) (-13.21) _cons -31.67*** -31.53*** -30.73*** (0.63) distance~n 0.129 (1.96) distance~m 0.306* (-1.58) distanc~nt -0.157 (-11.07) (-11.02) (-10.99) lnDistance -1.439*** -1.424*** -1.455*** (1.53) (1.58) (1.30) lnGDPp~2_M 0.202 0.207 0.176 (-0.30) (-0.28) (-0.49) lnGDPp~1_M -0.0401 -0.0360 -0.0663 (20.25) (20.44) (19.95) lnGDP2_M 0.939*** 0.926*** 0.929*** (18.62) (18.77) (18.33) lnGDP1_M 0.864*** 0.850*** 0.854*** LnImpor~M LnImpor~M LnImpor~M (1) (2) (3)

(20)

20

Table 4.6

The impact of individual cultural distances on import

4.3.1.3. All the Variables

Now the differences of the cultural variables are all regressed at once to find an impact on export and import. You can see the results in the table 4.7 below. The only cultural distance variable that is significant is the willingness to fight for your country, which has a positive impact on export. On the regression on import there is no significant cultural distance variable. This says that when all the distances in nationalistic and environmental concerned variables are compared, only the willingness to fight for your country has a positive impact on export.

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9487 0.9469 0.9470 N 72 72 72 (-10.93) (-11.38) (-13.07) _cons -28.80*** -30.24*** -31.17*** (-0.51) dis~etotal -0.0402 (0.49) dis~mtotal 0.0320 (1.58) distanc~ht 0.104 (-10.62) (-10.34) (-10.97) lnDistance -1.554*** -1.474*** -1.451*** (1.56) (1.32) (1.50) lnGDPp~2_M 0.206 0.179 0.206 (-0.27) (-0.47) (-0.27) lnGDPp~1_M -0.0361 -0.0632 -0.0370 (17.55) (19.11) (19.93) lnGDP2_M 0.892*** 0.921*** 0.929*** (16.06) (17.54) (18.31) lnGDP1_M 0.816*** 0.845*** 0.853*** LnImpor~M LnImpor~M LnImpor~M (1) (2) (3)

(21)

21

Table 4.7

The impact of all the cultural distances on export and import

4.3.1.4. Total Distance of Environmental Concern and Nationalism

Finally, the effect of the total distance in environmental concerned and nationalistic questions are regressed on export and import. The results can be found in table 4.8. In all the regressions there is no significant cultural distance variable. So, the totals of the environmental concerned and

nationalistic questions do not have an impact on export and import.

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9368 0.9539 0.2878 N 72 72 72 (-7.25) (-9.34) (1.75) _cons -28.71*** -30.24*** 9.210* (1.73) (1.36) (2.10) distanc~ht 0.156* 0.100 0.252** (0.84) (0.89) (0.18) dista~ceeo 0.344 0.299 0.0974 (-0.13) (-0.20) (0.04) distance~n -0.0446 -0.0562 0.0199 (1.60) (1.67) (0.30) distance~m 0.328 0.278 0.0829 (-1.40) (-1.49) (-0.20) distanc~nt -0.255 -0.222 -0.0487 (-0.10) (0.16) (0.18) dista~veeo -0.181 0.228 0.430 (1.15) (0.83) (0.12) distan~yeo 0.164 0.0961 0.0233 (1.06) (1.17) (2.00) distance~e 0.478 0.432 1.197* (0.15) (0.24) (-1.44) distance~y 0.0178 0.0235 -0.233 (-7.73) (-8.66) (-1.41) lnDistance -1.706*** -1.563*** -0.414 (1.87) (1.43) (2.02) lnGDPp~2_M 0.365* 0.228 0.526** (-0.77) (-0.09) (2.02) lnGDPp~1_M -0.150 -0.0142 0.526** (9.64) (15.90) (-2.91) lnGDP2_M 0.671*** 0.904*** -0.270*** (14.86) (14.57) (-2.91) lnGDP1_M 1.034*** 0.829*** -0.270*** LnExpor~M LnImpor~M lndiffe~e (1) (2) (3)

(22)

22

Table 4.8

The impact of the total of environmental concerned and nationalistic questions on export and import

4.3.2. Gravity Model 3.2

4.3.2.1 Individual Regressions on Export

Then regressions are done to see the impact of cultural variables of country i and j on export of country i to country j. In Table 4.9, 4.10 and 4.11 you can see that the cultural variables of country i are significant for the following variables: having confidence in environmental organizations, participating in environmental demonstrations, being active in environmental organizations, feeling proud of your country, feeling as a part of your nation and the total of nationalistic questions. And these coefficients are negative. This implies that cultures of different countries have separately a negative impact on export.

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9275 0.9474 0.1303 N 72 72 72 (-8.81) (-11.36) (1.24) _cons -28.84*** -30.30*** 5.583 (-0.57) (-0.75) (-1.33) dis~etotal -0.0598 -0.0641 -0.190 (1.20) (0.74) (-0.57) dis~mtotal 0.104 0.0522 -0.0679 (-9.25) (-10.26) (0.10) lnDistance -1.655*** -1.496*** 0.0242 (1.90) (1.43) (1.02) lnGDPp~2_M 0.323* 0.197 0.237 (-1.14) (-0.33) (1.02) lnGDPp~1_M -0.193 -0.0454 0.237 (11.70) (19.00) (-1.54) lnGDP2_M 0.695*** 0.919*** -0.126 (17.81) (17.44) (-1.54) lnGDP1_M 1.058*** 0.844*** -0.126 LnExpor~M LnImpor~M lndiffe~e (1) (2) (3)

(23)

23

Table 4.9

The impact of cultural variables from country i and j on export

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9267 0.9361 0.9379 0.9275 0.9380 N 72 72 72 72 72 (-5.33) (-8.59) (-11.61) (-9.08) (-11.16) _cons -30.72*** -29.30*** -31.10*** -30.56*** -29.72*** (0.19) activeeo2 0.196 (-3.48) activeeo1 -3.660*** (-0.79) moneyeo2 -0.101 (0.73) moneyeo1 0.0925 (0.78) particip~2 0.255 (-2.95) particip~1 -0.967*** (1.65) confiden~2 0.392 (-2.50) confiden~1 -0.594** (0.60) jobprior~2 0.0703 (-0.53) jobprior~1 -0.0623 (-9.45) (-10.08) (-7.33) (-8.89) (-10.55) lnDistance -1.566*** -1.553*** -1.407*** -1.568*** -1.591*** (1.83) (1.33) (2.11) (1.89) (2.09) lnGDPp~2_M 0.437* 0.223 0.344** 0.486* 0.331** (-1.13) (-0.10) (-2.00) (-1.24) (-0.19) lnGDPp~1_M -0.270 -0.0160 -0.326** -0.319 -0.0306 (11.19) (12.89) (12.88) (12.09) (12.82) lnGDP2_M 0.732*** 0.754*** 0.718*** 0.707*** 0.714*** (16.18) (17.39) (19.98) (18.49) (18.27) lnGDP1_M 1.058*** 1.016*** 1.114*** 1.081*** 1.017*** LnExpor~M LnExpor~M LnExpor~M LnExpor~M LnExpor~M (1) (2) (3) (4) (5)

(24)

24

Table 4.10

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9270 0.9313 0.9360 0.9289 N 72 72 72 72 (-10.40) (-7.86) (-6.30) (-6.94) _cons -30.09*** -26.83*** -27.36*** -27.40*** (-0.04) fight2 -0.00275 (-1.66) fight1 -0.116 (1.25) nation2 0.275 (-2.66) nation1 -0.586*** (-0.58) national~2 -0.0965 (-2.26) national~1 -0.377** (-0.94) environm~2 -0.141 (-0.55) environm~1 -0.0825 (-9.05) (-8.68) (-9.32) (-9.71) lnDistance -1.641*** -1.460*** -1.514*** -1.609*** (2.09) (1.75) (2.01) (2.02) lnGDPp~2_M 0.501** 0.294* 0.312** 0.340** (-0.33) (-1.75) (-1.00) (-1.47) lnGDPp~1_M -0.0785 -0.295* -0.155 -0.248 (10.08) (12.76) (12.60) (11.06) lnGDP2_M 0.678*** 0.725*** 0.753*** 0.708*** (15.64) (19.36) (16.74) (16.04) lnGDP1_M 1.053*** 1.101*** 1.002*** 1.027*** LnExpor~M LnExpor~M LnExpor~M LnExpor~M (1) (2) (3) (4)

(25)

25

Table 4.11

4.3.2.2 Individual Regressions on Import

Secondly the regression is done on the dependent variable Import. The results are shown in Table 4.12 and 4.13. The only cultural variable that has a significant impact on import is: the need to protect the environment of country j. And it has a negative coefficient. This implies that the environmental concern of an individual country has a negative impact on import.

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9394 0.9271 N 72 72 (-2.90) (-10.17) _cons -18.74*** -29.99*** (-0.00) env~2total -0.000165 (-1.06) env~1total -0.156 (0.60) nat~2total 0.0708 (-3.60) nat~1total -0.425*** (-9.88) (-9.42) lnDistance -1.502*** -1.598*** (2.03) (1.38) lnGDPp~2_M 0.399** 0.340 (-3.21) (0.05) lnGDPp~1_M -0.629*** 0.0120 (11.53) (10.80) lnGDP2_M 0.741*** 0.710*** (14.61) (15.85) lnGDP1_M 0.940*** 1.042*** LnExpor~M LnExpor~M (1) (2)

(26)

26

Table 4.12

(27)

27

Table 4.13

The impact of cultural variables from country i and j on import

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9495 0.9488 0.9480 0.9472 0.9474 0.9491 N 72 72 72 72 72 72 (-13.24) (-10.10) (-8.09) (-8.96) (-4.58) (-12.92) _cons -30.48*** -28.49*** -30.31*** -29.17*** -26.44*** -30.48*** (-1.54) env~2total -0.180 (0.48) env~1total 0.0561 (-0.44) nat~2total -0.0459 (-0.84) nat~1total -0.0880 (-0.46) fight2 -0.0268 (-0.68) fight1 -0.0390 (-0.95) nation2 -0.180 (0.65) nation1 0.123 (-0.68) national~2 -0.0943 (-1.56) national~1 -0.214 (-1.83) environm~2 -0.217* (-0.03) environm~1 -0.00378 (-10.55) (-9.93) (-10.27) (-10.77) (-10.51) (-10.86) lnDistance -1.523*** -1.379*** -1.439*** -1.472*** -1.424*** -1.474*** (2.31) (1.12) (1.49) (1.27) (0.80) (2.09) lnGDPp~2_M 0.441** 0.155 0.199 0.177 0.139 0.411** (-0.20) (-0.85) (-0.45) (-0.53) (-0.84) (-0.59) lnGDPp~1_M -0.0373 -0.119 -0.0607 -0.0736 -0.147 -0.116 (16.38) (19.94) (17.52) (17.33) (15.95) (16.90) lnGDP2_M 0.877*** 0.937*** 0.904*** 0.915*** 0.914*** 0.889*** (15.77) (18.44) (16.84) (15.80) (14.38) (16.35) lnGDP1_M 0.845*** 0.867*** 0.869*** 0.834*** 0.824*** 0.861*** LnImpor~M LnImpor~M LnImpor~M LnImpor~M LnImpor~M LnImpor~M (1) (2) (3) (4) (5) (6)

(28)

28 4.3.2.3 All the Variables

In table 4.14 you can find the impact of all the cultural variables from country i and j on export and import. Due to a problem of multicollinearity of the variables: ‘GDP per capita of country i and j, being active in environmental organizations of country i and j and feeling part of your nation of country i and j.’ This model cannot be interpreted in the right way. But the variables job priority to people from your country, having confidence in environmental organizations, participation in environmental demonstrations, donating money to environmental organizations, wanting to protect the environment and being proud of your country have a significant impact on export.

The cultural variables ‘donating money to environmental organizations’ and ‘wanting to protect the environment’ have a significant impact on import.

(29)

29

Table 4.14

The impact of all the cultural variables from country i and j on export and import

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9667 0.9561 0.4091 N 72 72 72 (-2.20) (-3.69) (2.97) _cons -15.47** -28.44*** 34.76*** (-0.50) (-0.93) (-3.20) fight2 -0.0325 -0.0660 -0.345*** (0.51) (0.48) (-3.20) fight1 0.0331 0.0338 -0.345*** (.) (.) (.) nation2 0 0 0 (.) (.) (.) nation1 0 0 0 (-0.44) (0.05) (0.66) national~2 -0.0692 0.00779 0.172 (-2.78) (-1.35) (0.66) national~1 -0.435*** -0.233 0.172 (-2.44) (-1.83) (-2.10) environm~2 -0.553** -0.455* -0.794** (-0.10) (-1.09) (-2.10) environm~1 -0.0227 -0.271 -0.794** (.) (.) (.) activeeo2 0 0 0 (.) (.) (.) activeeo1 0 0 0 (2.77) (2.08) (0.71) moneyeo2 0.524*** 0.433** 0.225 (-3.44) (-0.71) (0.71) moneyeo1 -0.651*** -0.148 0.225 (0.30) (-0.93) (-0.27) particip~2 0.0872 -0.296 -0.129 (-3.75) (-0.89) (-0.27) particip~1 -1.088*** -0.284 -0.129 (3.62) (1.59) (1.40) confiden~2 1.278*** 0.618 0.823 (-3.33) (0.85) (1.40) confiden~1 -1.175*** 0.328 0.823 (0.98) (0.72) (-0.85) jobprior~2 0.172 0.140 -0.249 (-3.52) (-1.09) (-0.85) jobprior~1 -0.619*** -0.211 -0.249 (-7.29) (-6.94) (-2.16) lnDistance -1.408*** -1.473*** -0.695** (.) (.) (.) lnGDPp~2_M 0 0 0 (.) (.) (.) lnGDPp~1_M 0 0 0 (9.64) (10.20) (-3.37) lnGDP2_M 0.809*** 0.941*** -0.472*** (9.73) (8.59) (-3.37) lnGDP1_M 0.817*** 0.792*** -0.472*** LnExpor~M LnImpor~M lndiffe~e (1) (2) (3)

(30)

30 4.3.2.4 Total Distance of Environmental Concern and Nationalism

When regressing the totals of environmental concerned and nationalistic questions, you find in table 4.15 that on export only the total of nationalistic questions of country i is significant and negative. On import no total cultural variable is significant. This implies that a nationalist country invests less in export.

Table 4.15

The impact of the total of environmental concerned and nationalistic questions from country i and j on export, import and trade

* p<.10, ** p<.05, *** p<.01 t statistics in parentheses R-sq 0.9394 0.9498 0.2825 N 72 72 72 (-2.82) (-4.61) (2.90) _cons -18.93*** -26.94*** 26.52*** (-0.03) (-1.40) (-2.26) env~2total -0.00383 -0.173 -0.437** (-0.19) (0.72) (-2.26) env~1total -0.0271 0.0894 -0.437** (0.58) (-0.06) (-1.36) nat~2total 0.0726 -0.00624 -0.232 (-3.34) (-0.96) (-1.36) nat~1total -0.418*** -0.105 -0.232 (-9.18) (-10.09) (-0.52) lnDistance -1.510*** -1.446*** -0.117 (1.39) (1.54) (1.11) lnGDPp~2_M 0.406 0.392 0.444 (-2.01) (-1.05) (1.11) lnGDPp~1_M -0.588** -0.269 0.444 (10.85) (14.98) (-3.42) lnGDP2_M 0.740*** 0.891*** -0.319*** (13.71) (14.04) (-3.42) lnGDP1_M 0.936*** 0.835*** -0.319*** LnExpor~M LnImpor~M lndiffe~e (1) (2) (3)

(31)

31

5. Conclusion

Differences in culture can lead to miscommunication between countries which could reduce trade. In previous research they found that similar cultural aspects have an impact on trade, other research found that individualism/collectivism and differences in languages reduce trade. This thesis looked at the impact of cultural differences of nationalism and environmental concern on trade. From the World Values Survey, data for cultural differences were extracted for nine European Union countries in the period of 2010-2014. Five questions were extracted to define environmental concern of countries and four to define nationalism. This data was processed in a simple gravity of trade model, a model that is typically used to look at international trade flows. With two gravity model’s

regressions were done to find if differences in nationalism and environmental concern between countries have an impact on export and import.

The results show that GDP has a positive impact on export and import, and distance

between countries a negative impact, these results were expected because of the literature that has already been done. With gravity model 3.1 the impact of the differences in cultural variables on export and import were regressed. With this model only two nationalistic variables were significant. They also have a positive impact on export and import which implies that differences in nationalism increase trade, which is different than was expected, but can be explained by the second theory on nationalistic countries. This theory said that when a country is nationalistic, they care about the wealth of their country, so they are more likely to invest in trade. Less nationalistic countries are more likely to invest in trade, so differences in nationalism can lead to more trade. An effect that we see in this research.

Gravity model 3.2 looked at the impact of culture of country i and j separately on export and import. Now there are more significant variables of both environmental concerned and nationalistic questions. These variables mostly have a negative impact on trade, which my hypothesis suggested. This says that trade is not that much impacted by differences between countries in nationalism and environmental concerns, but more by the cultures separately.

Thereby the dependent variables export and import were used. The result shows more significant variables when export is the dependent variable in both gravity models. This suggest that differences in culture has more impact on export than on import. But the data of export and import are inconsistent, so this might also be the reason why the impacts are different. When you look at the significant variables in gravity model 3.1, you can say that countries will export more when nationalistic differences are higher than they will import. In gravity model 3.2 export will be lower if countries are separately more nationalistic or environmental concerned than import.

(32)

32 with all the variables in one model and with the totals of nationalistic and environmental concerned questions. There were different results between these regressions. The variables have individually more impact on export and import than together in one model or the totals in the model. This implies that there are differences between the variables used for nationalism and environmental concerns. In gravity model 3.1, being proud of your country and willingness to fight for your country are individual significant variables for nationalism, but when all the variables are together in the model, only the willingness to fight for your country is significant. In gravity model 3.2 the variables, having confidence in environmental organizations, participating in environmental organizations, being proud of your country, feeling part of your nation and the totals of nationalistic questions are significant individually, and when the totals of nationalism and environmental concerns are

regressed, only the total of nationalistic questions of country i is significant.

The results are different between gravity model 3.1 and 3.2, the regressions done with the models and the dependent variable. A lot of variables are never significant, and only nationalistic variables are positive and significant when looked at the differences of the countries. Some environmental concerned variables became significant when regressed individually with the countries separately. Cultural variables have also a stronger impact on export of countries than import. In conclusion, some nationalistic and environmental concerned variables have an impact on trade in the European Union, especially on the export. Differences in nationalism have a positive impact on trade and the culture of country i and j have separate, a negative impact on trade in the European Union.

6. Discussion

There are still variables in nationalism and environmental concern that are not significant. This might be explainable by the constraints in this thesis. World Values Survey provides the largest dataset of values of countries around the world, but only provides data of nine European Union countries. So, the data sample is small.

Another possible reason is that cultural variables only have a small impact on trade. In the gravity model the variables GDP and distance between countries is used, these variables have a lot of impact on trade, so culture might only have a small effect on trade which leads to insignificant results (Cyrus, 2015).

It’s also possible that because of the globalization the countries in the European Union became very similar. Countries are more aware of each other’s cultures and take over parts of other cultures, so miscommunication do not occur that much in the European Union anymore. So cultural differences are not that important anymore in the European Union.

(33)

33 Finally, the reason for insignificancy can be that it is not the differences in culture which have impact on trade, but the level of nationalism and environmental concerns. In gravity model 3.2 you can see that cultural variables of countries are more significant when regressed separately. This might be an interesting view for further research.

There has been done research on the impact of culture on trade, but not with the variables nationalism and environmental concern, this is a new view of impact of culture on trade where more research can be done on. A start can be by looking further than the European Union and maybe in different timeframes. My thesis also suggests that the impact of culture on trade is not that much in the differences but in the level of culture. So, a suggestion is to research this view.

References

Allington, N. F., Waldmann, F. A., & Kattuman, P. (2004, December 11). One Market, One Money, One Price? Price Dispersion in the European Union. SSRN electronic journal, 2-38.

Anderson, J., & Marcouiller, D. (2002). Insecurity and the Pattern of Trade: An Empirical Investigation. The Review of Economics and Statistics, 84(2), 342-352.

Bergstrand, J. (1985). The Gravity Equation in International Trade: Some Microeconomic

Foundations and Empirical Evidence. The Review of Economics and Statistics, 67(3), 474-481. doi:10.2307/1925976

Cyrus, T. (2015). Culture and Trade in the European Union. Journal of Economic Integration, 30(2), 206-239.

Distance From To net. (2018). Distance From To. Retrieved from https://www.distancefromto.net/

Esty, D. C., & Geradin, D. (1997). Market Access, Competitiveness, and Harmonization:

Environmental Protection in Regional Trade Agreements. Harvard Environmental Law

Review, 21, 265-336

Fletcher, W., Weissler, R., & Sobin, R. (1993). Trade and Environment: On the Need to Improve Information and Decision Making. The Journal of Environment & Development, 2(1), 111-121.

Frankel, J. (2008). Environmental Effects on International Trade. Expert Report No. 31 to Sweden’s

(34)

34 Frankel, J., & Rose, A. (2002). An Estimate of the Effect of Common Currencies on Trade and

Income. The Quarterly Journal of Economics, 117(2), 437-466.

Geraci, V., & Prewo, W. (1977). Bilateral Trade Flows and Transport Costs. The Review of Economics

and Statistics, 59(1), 67-74. doi:10.2307/1924905

Goldman, R. (2017, February 18). Geert Wilders, a Dutch Nationalist Politician, Calls Moroccan Immigrants ‘Scum’. The New York Times. Retrieved from

https://www.nytimes.com/2017/02/18/world/europe/geert-wilders-netherlands-freedom-party-moroccan-immigrants.html

Guiso, L., Sapienza, P., & Zingales, L. (2006). Does culture affect economic outcomes? Journal

Economic Perspectives, 20(2), 23 - 48.

Guiso, L., Sapienza, P., & Zingales, L. (2009). Cultural Biases in Economic Exchange? The Quarterly

Journal of Economics, 124(3), 1095-1131.

Hajikhameneh, A., & Kimbrough, E. (2017). Individualism, Collectivism and Trade. SSRN Electronic

Journal.

Heck, W. (2016, April 7). Alles wat je moet weten over het Oekraïne-referendum op 6 april. nrc. Retrieved from https://www.nrc.nl/nieuws/2016/04/07/alles-wat-je-moet-weten-over-het-oekraine-referendum-a1405153

Heerink, N. B. M., & Kuik, A. (1994). Is internationale handel goed of slecht voor het milieu?. ESB

Economisch Statistische Berichten.

Helpman, E., Melitz, M., & Rubinstein, Y. (2008). Estimating Trade Flows: Trading Partners and Trading Volumes. The Quarterly Journal of Economics, 123(2), 441-487.

Hutchinson, W. (2005). "Linguistic Distance" as a Determinant of Bilateral Trade. Southern Economic

Journal, 72(1), 1-15. doi:10.2307/20062091

IMF. (2017). Direction of Trade Statistics. Washington, DC, USA.

Kogut, B., & Singh, H. (1988). The Effect of National Culture on the Choice of Entry Mode. Journal of International Business Studies, 19(3), 411-432.

(35)

35 Linders, G.-J., Slangen, A., De Groot, H. L., & Beugelsdijk, S. (2005). Cultural and Institutional

Determinants of Bilateral Trade Flows. Tinbergen Institute Discussion Paper.

Mayda, A. M., & Rodrik, D. (2005). Why are some people (and countries) more protectionist than others? European Economic Review, 49(6), 1393-1430.

Nielsen, R. (1979). Cultural-Economic Nationalism and International Trade Policy. The Academy of

Management Review, 4(3), 449-452.

Nitsch, V. (2000). National Borders and International Trade: Evidence from the European Union. The

Canadian Journal of Economics / Revue Canadienne D'Economique, 33(4), 1091-1105.

O’Toole, F. (2016, June 19). Brexit is being driven by English nationalism. And it will end in self-rule.

The Guardian. Retrieved from

https://www.theguardian.com/commentisfree/2016/jun/18/england-eu-referendum-brexit

Perroni, C., & Wigle, R. (1994). International Trade and Environmental Quality: How Important Are the Linkages? The Canadian Journal of Economics / Revue Canadienne D'Economique, 27(3), 551-567. doi:10.2307/135783

Porras, I. (1995). The Puzzling Relationship between Trade and Environment: NAFTA,

Competitiveness, and the Pursuit of Environmental Welfare Objectives. Indiana Journal of

Global Legal Studies, 3(1), 65-79.

Shulman, S. (2000). Nationalist Sources of International Economic Integration. International Studies

Quarterly, 44(3), 365-390.

Smith, J. (1935). Economic Nationalism and International Trade. The Economic Journal, 45(180), 619-648. doi:10.2307/2225565

Srivastava, R., & Green, R. (1986). Determinants of Bilateral Trade Flows. The Journal of

Business, 59(4), 623-640.

White, R., & Tadesse, B. (2008), Cultural Distance and the US Immigrant–Trade Link. World

(36)

36 World Bank. (2017). Data catalog. Retrieved from https://data.worldbank.org/data-catalog

World Values Survey Org. (2017). World Values Survey. Madrid, Spain. Retrieved from

http://www.worldvaluessurvey.org/

Zar, J. (1989). Microcomputer Calculation of Distance and Initial Direction along Great-Circle Routes (Programa en microcomputadora para determinar la distancia y dirección inicial a lo largo de "Rutas del Círculo Mayor"). Journal of Field Ornithology, 60(4), 520-522

Appendix

Table A

The explanation of the variables used in the regression.

Variable: Gravity model 3.1 Gravity model 3.2 Meaning:

LnExpor~M LnExpor~M

The ln of the mean of the export

per country (2010-2014)

LnImpor~M LnImpor~M

The ln of the mean of the import

per country (2010-2014)

lnGDP1_M lnGDP1_M

The ln of the mean of the GDP of

the i country (2010-2014)

lnGDP2_M lnGDP2_M

The ln of the mean of the GDP of

the j country (2010-2014)

lnGDPp~1_M lnGDPp~1_M

The ln of the mean of the GDP per

capita of the i country (2010-2014)

lnGDPp~2_M lnGDPp~2_M

The ln of the mean of the GDP per

capita of the j country (2010-2014)

lnDistance lnDistance

The ln of the distance between

country i and country j

dis~mtotal nat~1total/

nat~2total

The total cultural distance of nationalism between countries

dis~etotal env~1total/

env~2total

The total cultural distance of environmental concern between countries

distance~y jobprior~1/

jobprior~2

The cultural distance between countries measured by the question: ‘When jobs are scarce, employers should give priority to people of this country over immigrants.’

(37)

37

dista~ceeo confiden~1/

confiden~2

The cultural distance between countries measured by the question: ‘level of confidence in environmental organizations.’

distance~e particip~1/

particip~2

The cultural distance between countries measured by the question: ‘Participation in demonstration for some

environmental cause in the past two years.’

distan~yeo moneyeo1/

moneyeo2

The cultural distance between countries measured by the question: ‘During the past two years have you given money to an ecological organization?’

dista~veeo activeeo1/

activeeo2

The cultural distance between countries measured by the question: ‘Active/inactive in Environmental organization?’

distanc~nt environm~1/

environm~2

The cultural distance between countries measured by the question: ‘Environment VS. Economic growth.’ (Focused on the Environment answer and shorter in paper as protecting the environment.)

distance~m national~1/

national~2

The cultural distance between countries measured by the question: ‘How proud are you to be [Nationality]?’

distance~n nation1/

nation2

The cultural distance between countries measured by the question: ‘I see myself as part of the [your country] nation.’

distanc~ht fight1/

fight2

The cultural distance between countries measured by the question: ‘willingness to fight for your country?’

Impact of national culture on trade in the European Union : what is the impact of differences in nationalism and environmental concern between countries on trade in the European Union?