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Trade openness and cultural creative destruction

Christopher J. Coyne (Department of Economics, George Mason University, Fairfax, Virginia, USA)
Claudia R. Williamson (Development Research Institute, New York University, New York, New York, USA)

Journal of Entrepreneurship and Public Policy

ISSN: 2045-2101

Article publication date: 20 April 2012

694

Abstract

Purpose

This paper seeks to analyze empirically the net effect of trade openness on “economic culture”, measured by indicators of trust, respect, level of self‐determination, and obedience. Openness to international trade means that societies are more likely to be exposed to alternative attitudes, beliefs, ideas, and values leading to a Schumpeterian process of creative destruction whereby culture is destroyed on some margins and enhanced on others.

Design/methodology/approach

Using data on trade openness from Quinn and Sachs and Warner, the paper empirically evaluates the impact of trade openness on economic culture. The paper's measure of culture is taken from Tabellini and Williamson and Kerekes, where data from the World Values Survey is aggregated to create a culture variable. The paper isolates the impact of trade policies on economic culture through a variety of empirical strategies including both panel and cross sectional analysis.

Findings

The central finding of the study is that a society's openness to international trade generates, on net, positive effects on economic culture. The more open a country is to trade, the more likely it is to possess culture conducive to economic interaction and entrepreneurship.

Originality/value

This paper contributes to the existing literature by studying the impact of trade openness on culture. While previous studies have asked “Does culture affect economic outcomes?”, this paper explores the answer to the related question, “How does openness to trade affect culture?”.

Keywords

Citation

Coyne, C.J. and Williamson, C.R. (2012), "Trade openness and cultural creative destruction", Journal of Entrepreneurship and Public Policy, Vol. 1 No. 1, pp. 22-49. https://doi.org/10.1108/20452101211208344

Publisher

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Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

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