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Are cultural preferences important in international trade flows? We attempt to answer this question by using the phenomenon whereby Korean pop culture has grown immensely popular across the globe in the last two decades. We compile cross-country panel data on South Korea’s TV show exports to 136 countries for the period 2001?2014. These data, when combined with Korea’s exports of goods (at the HS 4-digit level), exhibit large variations across years, countries, and products. We demonstrate that more exposure to Korean culture increases foreign consumers’ demand for Korean goods, and the effect differs across types of products. First, given the fact that women spend more time consuming Korean soap operas and music, we show that higher Korean TV show exports significantly increase female visitors to Korea and its exports of women’s clothing and cosmetics, while the effects are smaller on male visitors and men’s clothing. This provides strong evidence for the demand-driven mechanisms, because supply-side factors cannot explain such gender-biased effects within a product category having the same technology. Furthermore, we find that Korean TV show exports have significantly positive effects on consumer goods, but no effects on capital or intermediate goods. Our estimate suggests that the Korean wave contributed to South Korea’s economy by about 3.1% of GDP in 2002, from merchandise trade alone. Several extensions and falsification tests are conducted to address endogeneity concerns and potential alternative mechanisms. Together, our findings suggest that cultural content flows can have powerful impacts on international trade through the demand channel.
Korean Wave, International Trade, FDI, Gravity Equation, Preference Diffusion