Abstract

Intangible distance may play a role as both trade barriers and competitive advantages in cross-border trade. Moreover, for agro-food products, intangible distance reflects the discrepancy between eating habits of the importing and exporting countries, and thus affects agro-food trade also as “eating-habit distance”. This paper investigates the effects of four dimensions of intangible distance on China’s agro-food exports, namely, cultural distance, institutional distance, distance in education, and distance in industrial development. A panel data of 78 countries covering the period 2002-2016 is used, and an extended gravity model is employed. We control for the effects of quality or level of institution, education, and industrial development of China and its trading partners to distinguish the “quality effects” from “distance effects” and to test the robustness of the results. To explore the (possible) different effects of intangible distance on different categories of agro-food products, we consider not only the total agro-food exports, but also the individual samples of the four agro-food categories classified according to the Harmonized System codes. We find that all these dimensions of intangible distance influence China’s agro-food exports significantly, at least for certain categories of agro-food products. Distance in institution, education, and industrial development function as measures of trade costs, whereas cultural distance functions more like a reflection of competitive advantage. Furthermore, when the distance in institution, education or industrial development increases in favor of the importing countries, the negative effects of intangible distance are partly neutralized by the importers’ improved level of institution, education or industrialization.

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