Ethical distance and difference in bilateral trade

Cultural, institutional, and psychic distances between countries are critical determinants of bilateral trade. In this paper we examine if ethical distance and difference between an exporting country and an importing country matter in international trade. Using data from 53 countries that participated in the World Values Survey, we show that the closer the ethical distance between countries the greater the trade. We also find that the ethicality of importers matter more than exporters as a determinant of bilateral trade.