The impact of cultural trade on economic growth

The relationship between international trade and economic growth has been an area of interest to many researchers in recent years. Although the literature is broad with respect to this topic, few studies have focused on the particular effect of cultural exports and imports on economic growth. This study addresses the relationship between trade in cultural goods and economic growth for 31 countries in Europe for the period 2004–2017, through a vector error correction model (VECM). A panel Granger causality test and a system generalized method of moments (GMM) are also utilized in this study. Cultural trade is characterized by exports and imports of cultural goods. The results indicate there is a long-run equilibrium relationship between gross domestic product, total exports, capital formation and labour force. Cultural exports and imports have a positive effect on GDP in the long run. In the short run, there is Granger causality of cultural imports on economic growth, total exports, total imports and capital formation.