infonet-economy

This paper investigates the impact of human barriers to international trade using ancestral distance as a measure of the relatedness between populations. In a new data set covering the universe of global trade, our findings document that country pairs with a high ancestral distance are less likely to trade with each other (extensive margin) and if they do trade, ancestral distance negatively affects the volume and number of goods traded (intensive margin). These results are robust to including a vast array of micro-geographic controls as well as linguistic and religious distance variables. We provide evidence suggesting that the inverse relationship between bilateral trade flows and ancestral distance arises from differences in values, preferences, and technology, as well as network effects.