Economic and Cultural Globalisation

Cultural Effects of Trade Liberalization
Steve Suranovic and Robert Winthrop1 2 September 2005

Abstract
We incorporate culture into a standard trade model in two distinct ways. In the “cultural affinity from work” model, workers receive a non-pecuniary cultural benefit from work in a particular industry. In the “cultural externality” model, consumers of a product receive utility from other consumer’s consumption of a domestic good. We show that resistance to change due to cultural concerns can reduce the national benefits from trade liberalization. Complete movements to free trade will have a positive national welfare impact in the cultural affinity case whereas it may lower national welfare in the cultural externality case. We also show that a loss of cultural benefits is more likely to occur in the externality model.

Keywords: Culture, trade, liberalization, externalities, non-pecuniary benefit. JEL Classification: F1, Z1, F11, F16

Notes
Steve Suranovic, Department of Economics, George Washington University, Washington, DC 20052; [e-mail]. Robert Winthrop, Bureau of Land Management, Department of the Interior, Washington, DC 20240 and Program on Culture in Global Affairs, George Washington University; [e-mail]. The views expressed are the authors ', and do not represent the policies of the Department of the Interior.
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The authors wish to thank participants at the George Washington University Economics Department seminar; colleagues in the Program on Culture in Global Affairs in the Elliott School at GW University, and colleagues at the Society for Applied Anthropology annual meeting.

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Cultural Effects of Trade Liberalization
September 2005

Abstract
We incorporate culture into a standard trade model in two distinct ways. In the “cultural affinity from work” model, workers receive a non-pecuniary cultural benefit from work in a particular industry. In the “cultural externality” model, consumers of a product

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