U n it ed S ta te s E x p o rt s

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V. Conclusions and Recommendations

5.1 Conclusions about Objectives

As for the primary objective for the study it has been proven that an econometrics model can be used to measure cultural change. For this study, it had implications for the years 1990- 2004. The study can now be extended to study cultural change for years before or after this time period. For the period of institutional reform, the model can measure cultural change. Next the Cold War era or the ear of Terrorism can be measured.

As for the first sub-objective to measure institutional change by using Hofstede’s original four cultural variables this was also a success though the success was uneven at times. The dimension of masculinity by using foreign students has clear implications. The use of the WTO as a measure of power distance also produced good results. The WTO can be replaced by regional trade agreements or whether or not the country has a free trade agreement in the future.

The amount of disputes produced results but this may not have been the best measure of individualism since the overall number of disputes in the WTO was quite low and membership in the WTO is inconsistent.

The commonality of language was useful for this model. It may be more useful to measure past eras before that of institutional reform when English was as globally used. After 2004, the use of language might not be an issue as most nations are trading outside their language.

As per the second sub-objective, population is a useful tool to discover the rate of culture change on a population during institutional reform. This could be used inversely for other eras to test the rate of cultural stability during the time period. In any case, this was an important indicator to be used and should be included in further models. Even if the cultural variables are changed, population should still be included in the model.

As per the third sub-objective, a regional analysis was most beneficial for showing changes in trade performance for the time period. This allowed not just a country specific aspect of institutional change to be examined but also countries that show regional similarities. This analysis was able to show differences that were not attributed to just culture and therefore was able to produce a higher R². As with population, if culture orientation is being compared across

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5.2 Conclusions on 6 Regions

There are a number of differences when running the same variables of x₂ to x₁₀ but with a change in x₁. When the direction of international exchange is changed, whether it be students coming into the United States to study from abroad or American students studying abroad, the importance of the variables changes as x₁ becomes more or less dominant. In other words, when examining the trait of masculinity, the degree of masculinity exhibited by the country that sends its citizens abroad to study can explain trade variation in varying importance. This is illustrated in Figure 4, which shows what happens to the cultural dimensions and regional performance as trade with the United States increases when x₁ is the number of American students studying abroad (as is shown in Table 9). It also shows what happens to the cultural dimensions and regional performance when x₁ indicates the number of foreign students studying in the United States (as is shown in Table 10).

As for United States exports, a high level masculinity is an important factor for increasing the amount of goods and services bought by other countries from the United States indicating a high masculinity of the United States recruiting these students and a high masculinity of the foreign countries sending the students. When foreign students coming into the United States are examined, this variable becomes the highest explanation for trade variance.

A lowering of power distance by joining the WTO and an increase individualism are also important changes in culture that are being exhibited by countries that are buying United States goods and services. This means that most countries that are buying United States goods and services have joined the WTO so that they can trade equally with the United States. Also these countries are risking international relationships by disputing what they perceive as unfair trade practices. Though these countries might be filing disputes against other member countries including the United States, they are becoming more homogeneously related to the United States in terms of individualism and this is helping the United States sell goods.

Population cannot explain the trade variance for United States exports when Americans are studying abroad maybe because Americans are going to study in countries that are mostly in Europe and rate on the same scale of population. However, population does play a part when

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looking at foreign students coming into the United States. Countries that are small in nature are buying United States goods and services.

Uncertainty avoidance is best when low for countries when considering when Americans are studying abroad for buying United States goods and services. This means that countries that do not speak English are buying United States goods and services. However, when foreign students studying in the United States become a more dominant explanatory variable then there is a positive correlation between the use of English being used as an official language and the buying of United States goods and services. The difference in level of uncertainty avoidance between the two tables can be attributed to a lowering of power distance explaining less of the trade variance and a difference in terms of population. When looking at countries that buy United States exports, the foreign students that study in the United States usually come from small countries that speak English.

As far as the regional variables are concerned as related to United States exports when Americans are studying abroad, Asia is the only region to outperform Latin America and there is no significant relationship between Southeast Asia & Oceania and the buying of United States goods and services. This indicates that regional trade agreements such as NAFTA and ASEAN have had no positive impact on the buying of United States goods and services.

When looking at the buying of United States goods and services when foreign students are used as an indicator of masculinity then all regions have not bought more United States goods and services than Latin America with Europe having no significant relationship. Students are coming to the United States to study from regions that are not buying United States goods and services.

Turning to United States imports, the indicators used for masculinity and power distance are the same for both tables. Countries that are exhibiting high masculinity by recruiting American students and sending their students to the United States are selling their goods to the United States. These countries have also lowered their power distance by joining the WTO.

When examining the tables for the countries in both tables there is no significant relationship between individualism and the selling of goods and services to the United States.

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112 Figure 4 Cultural Change and Regional Performance in 6 Regions

U n it ed S ta te s E x p o rt s

TRADE PERFORRMANE

Masculinity

Power Distance Individualism

Pop.

Uncertainty Avoidance

Asia

Africa

SE Asia

Middle East Europe

Americans Studying Abroad

TRADE PERFORRMANE

Masculinity

Power Distance Individualism

Population Uncertainty Avoidance

Africa

Middle East

Europe

Asia Southeast Asia

Foreign Students in the United States

U n it ed S ta te s I m p o rt s

TRADE PERFORRMANE

Masculinity

Power Distance

Individ.

Population

Uncertainty Avoidance

Asia

Africa

SE Asia

Middle East Europe

Americans Studying Abroad

TRADE PERFORRMANE

Masculinity

Power Distance

Population

& Individ.

Uncertainty Avoidance

Africa

Middle East

Europe

Asia

Southeast Asia

Foreign Students in the United States

U n it ed S ta te s B a la n ce o f T ra d e

TRADE PERFORRMANE

Masculinity

Power Distance& Individ.

Population Uncertainty Avoidance

SE Asia

Middle East

Europe

Africa

Asia

Americans Studying Abroad

TRADE PERFORRMANE Masculinity

Population

Uncertainty Avoidance

Middle East

Europe Africa

Asia

Power Distance

Individ.

Southeast Asia

Foreign Students in the United States

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There is a relationship between size and trade variance when examining Americans studying abroad. The countries with larger populations are selling more goods and services to the United States. There is no significant relationship between population and trade variance of United States imports when looking at the number of foreign students studying in the United States.

There’s a difference in uncertainty avoidance also that appears the same as that when looking at United States exports. When looking at countries and Americans studying abroad, low uncertainty avoidance countries are selling high amounts of goods and services to the United States when compared to countries that are high in uncertainty avoidance. This trend is reversed when looking at foreign students studying in the United States. High uncertainty countries are selling more goods and services to the United States than low uncertainty countries. This maybe be due to the fact then when examining the number of foreign students that enter the United States to study, the variables of individualism through trade disputes in the WTO and population fail to explain the trade variance leaving room for countries that share a commonality of language to explain increased sales of goods to the United States.

Regionally, the variables are the same as with United States exports. When using Americans studying abroad as an explanatory variable, Asia is the only region to outperform Latin America for the selling of goods and services to the United States and Southeast Asia &

Oceania show no significant relationship. When looking at foreign students studying in the United States, no region outperforms Latin America for selling goods and services to the United States with Europe showing no significant relationship.

Finally to look at the balance of trade, countries for both tables that exhibit high masculinity produce trade deficits for the United States. The countries that are actively involved in student exchange and international education are gaining knowledge away from the United States and using it to take advantage of the United States market.

Membership into the WTO showing decreased power distance has no significant relationship when examining Americans studying abroad but does show that when countries take on a level playing field thereby lowering the power distance with the United States they are able to create a trade deficit for the United States by selling more goods to the United States than they are selling.

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For both indicators of individualism by using trade disputes against WTO member countries, there is no significant relationship between this variable and an explanation of trade variance.

Both sets of indicators for masculinity show that countries that have larger populations are creating more of a trade deficit than smaller countries. This is probably due to the rate of path dependence and workforce diversification. Large populated countries usually have closed economies as historically the countries under study that have large populations also had closed markets. Countries such as China are slow or reluctant to open up their economies and therefore are selling more goods and services to the United States than they are buying.

Countries that exhibit high levels of uncertainty avoidance by engaging in business activities within their commonality of language are producing a trade surplus when looking at Americans studying abroad as an indictor. Since Americans studying abroad does not explain as much of the trade variance as when foreign students studying abroad is used, countries that speak English officially are more generally better for the United States balance of trade than countries that do not use English officially. This can be seen in a lower standardized coefficient and t ratio when foreign students are studying in the United States marked with a much higher standardized coefficient and t ratio for masculinity. Therefore, when Americans are showing a low level of masculinity by the low level of Americans that go abroad to study then the use of English between the United States and its trading partner is good indicator of how to decrease the trade deficit.

Regionally, Africa and Southeast Asia & Oceania have no significant relationship when looking at Americans studying abroad. Asia produces a trade deficit for the United States while the Middle East and Europe produce trade surpluses for the United States.

When looking at foreign students as the indicator for masculinity, all regions produce trade surpluses comparatively with Latin America used as the baseline. Latin America is not buying many goods and services from the United States. The only region that could be explained as buying less goods and services from the United States was Asia.

For importance of explaining trade variance, if a holistic look at all the cultural indicators used in this study is warranted then the low level of masculinity that Americans are showing in regards to seeking international education shows that other cultural factors need to be examined and become more important when looking at how Americans are using American knowledge in

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their trade, or in other words, their lack of international knowledge. The variables explain around 60 percent of the trade variance.

However when foreign students are used as an indicator of masculinity, the explanation of trade variance jumps to up to 70% as in the case of United States imports. Therefore, knowledge of a foreign market, namely of the American market by foreigners is the critical explanation for trade success. This might be good for the American consumer who will get products at cheaper prices but is bad for the American economy as a whole as Americans will not be able to find a market for its goods and services in the future if it does not act more aggressively in the pursuit of international education.

5.3 Conclusions on Asia, Southeast Asia & Oceania, and the Middle East

When the regions under study are reduced to measure only three regions, which are rich in human resources, are compared to the regions rich in natural resources, differences in cultural and regional dimensions change when the indicator of masculinity is changed. The summary is based on the Table 11 where Americans studying abroad are examined and Table 12 where foreign students in the United States are examined.

When looking at United States exports, increased masculinity and a decreased power distance are beneficial to the buying of United States goods and services. Masculinity is explaining more of the trade variance for United States exports when examining the number or foreign students that are coming to study in the United States while decreased power distance becomes a stronger explanatory variable when looking the number of Americans studying abroad.

A high level of individualism is good for the buying of United States goods and services when examining Americans studying abroad. The low level of Americans studying abroad makes this variable able to explain more of the trade variance then when foreign students in the United States are looked at since no significant relationship is shown. The amount of foreign students studying abroad x1 becomes the main explanatory variable for United States exports in these three regions.

For both tables there is an inverse relationship between population size and economic performance. When both variables for masculinity are examined, the countries with large

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populations and presumably closed markets are not the buyers of United States goods and services in these three regions.

The commonality of language becomes a positive indicator of the exportation of goods and services from the United States when Americans are studying abroad while it becomes a negative indicator when looking at foreign students studying in the United States. English speaking countries in these regions are buying more United States goods and services than non- English speaking countries that are sending foreign students to the United States while non- English speaking countries are buying more United States goods and services than the English speaking countries that host American students. Countries that send foreign students and have a high amount of uncertainty avoidance are important markets for the buying of goods to the United States. Countries that have low uncertainty avoidance and host American students are important markets for United States exports.

Regionally, Asia and Southeast Asia & Oceania are both not buying more United States exports than the Middle East when looking at the number of Americans studying abroad as an indicator of masculinity. However, both regions are buying more United States goods and services then the Middle East when looking at the number of foreign students studying in the United States as a measure of masculinity. The more Americans study in Asian countries and secondly Southeast Asian & Oceanic countries the more these countries are buying goods and services than the Middle East so the countries in these regions are buying the most United States goods and services when looking at this number of American students. However, the more foreign students that come into the United States from Asian, and second, Southeast Asian &

Oceanic countries, the less they are buying goods and services from the United States. This can be attributed that large number of foreign students are coming from countries with large populations but rather it more likely means that the more Asian and Southeast Asian & Oceanic countries know the United States market, the more the are able to sell their goods to the United States while not buying expensive American made goods and services. It must be remembered that foreign educated individuals bring knowledge of manufacturing and service industries back to their respective countries making the likelihood of buying United States goods and services less probable.

Turning to United States imports, there is a marked difference in the significance of the relationships between the cultural variables when looking at both tables. There is still a positive

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correlation between masculinity and trade performance in the selling of goods and services to the United States. Not only are foreign students studying in the United States increasing the number of goods and services coming into the United States but also the number of Americans studying abroad is allowing the American students to gain knowledge of foreign markets and import goods from them. The indicator of foreign students studying in the United States is a much more relevant measure of this phenomenon.

When examining the number of American students studying abroad, a decreased power distance, increased individualism, and having countries with large populations are the important indicators when explaining the increasing number of goods and services coming into the United States. When the number of foreign students studying in the United States becomes the dominant explanatory variable for the increasing number of goods and services coming into the United States, there is no significant relationship between a lowered power distance by entry in the WTO, an increased sense of individualism by increasing the number of disputes in the WTO, and the size of a country in terms of its population.

The commonality of language becomes a positive indicator of the importation of goods and services to the United States when Americans are studying abroad while it becomes a negative indicator when looking at foreign students studying in the United States. English speaking countries in these regions are importing more goods and services than non-English speaking countries that are sending foreign students to the United States while non-English speaking countries are importing more goods and services to the United States than the English speaking countries that host American students. Countries that send foreign students and have a high amount of uncertainty avoidance are important markets for importing goods to the United States. Countries that have low uncertainty avoidance and host American students are important markets for United States imports.

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U n it ed S ta te s E x p o rt s

TRADE PERFORRMANE

Masculinity

Power Distance

Individualism

Population

Uncertainty Avoidance

Asia

Asia

Americans Studying Abroad

TRADE PERFORRMANE

Masculinity

Power Distance

Population

Uncertainty Avoidance

Asia

Southeast Asia

Individualism

Foreign Students in the United States

U n it ed S ta te s I m p o rt s

TRADE PERFORRMANE Masculinity

Power Distance

Individualism

Population

Uncertainty Avoidance

Asia

Southeast Asia

Americans Studying Abroad

TRADE PERFORRMANE Masculinity

Uncertainty Avoidance

Asia

Southeast Asia

Power DistanceIndividualism

& Population

Foreign Students in the United States

B a la n ce o f T ra d e

TRADE PERFORRMANE Masculinity

Population

Uncertainty Avoidance

Asia

Southeast Asia

Power Distance&Individualism

Americans Studying Abroad

TRADE PERFORRMANE Masculinity

Population

Uncertainty Avoidance

Asia

Southeast Asia

Power Distance&Individualism

Foreign Students in the United States Figure 5 Cultural Change and Regional Performance for Asia, SE Asia, the MiddleEast

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Asian and Southeast Asian & Oceanic countries are selling more goods and services to the United States as the number of American students study in these regions the more these regions sell goods and services to the United States while the more foreign students that come to study in the United States the less their countries sell goods and services to the United States.

American study abroad gives Americans the knowledge of what products are available at cheaper prices in the foreign markets making Americans the main importer of foreign goods.

Foreign education in the United States gives the foreign individuals knowledge of American products making them more likely to import them to their home country then trying to bring products into the United States.

When looking the balance of trade many of the indicators become reversed. The greater the trade surplus for the United States from these three regions, the less the amount of Americans going abroad to study, therefore, Americans are studying in countries that are producing trade deficit. Foreign students are coming to the United States to study from countries that are not producing a trade deficit for the United States. These regions are still selling more goods to the United States than they are buying. Even though Americans are going to study in countries that are producing a trade deficit, the number of Americans is not enough to change the balance of trade in favor for the United States.

The indicators of power distance through WTO membership and individualism through number of disputes in the WTO are not significant for analyzing the trade variance for the balance of trade.

For both indicators of masculinity, the indicator of population in negatively correlated for both tables. The larger the population, the higher the trade deficit produced for the United States.

The United States needs to try and either increase the amount of sales made to these countries or focus on the smaller populated countries to boost trade surplus.

Countries that use English officially and exhibit high uncertainty avoidance are countries that are producing trade surpluses when looked at the amount of Americans studying abroad presumably because the English speaking countries are the places where Americans are going to study more so than non-English speaking countries. Americans are then able to sell American goods to these countries since they have learned of the foreign market there. Foreign students in the region are mostly coming from countries that do not use English officially and therefore

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when this is used as an indicator of masculinity, it can be seen that the countries that do not speak English officially are creating a trade surplus. This may be due to the fact that the countries that do not speak English are greater in number in these regions than the countries that do not speak English and so when compared to the countries that do use English officially; they show a greater trade surplus.

The less Americans study abroad in the countries in these regions, the more this increases the trade deficit as can be seen when looking at the indicators of Asia and Southeast Asia &

Oceania taken from Table 13. The more foreign students that come to study the more trade surplus is produced for the United States as can be seen in the indicators of Asia and Southeast Asia & Oceania taken from Table 14.

The R² for the amount of foreign students studying in the United States is relatively higher than when the number of Americans studying abroad in measured. This indicates that the amount of foreign students studying in the United States from these three regions explains more of the trade variance than the other variables from both tables. When the number of Americans studying abroad is used to determine the orientation of masculinity, the R² is lower and the other cultural and regional variables become more dominant for explaining trade variance.

5.4 Conclusions on Europe, Latin America, and Africa

When the regions that have recently begun to trade with the United States, namely Asia, Southeast Asia & Oceania, and the Middle East; are changed to the three regions that have had long standing trade relationships such as Europe, Latin America, and Africa, the ability of the cultural and regional variables to explain recent trade variance differs greatly. In Figure 6, a representation is given of the results obtained from Table 13 where the number of Americans studying abroad is used to determine masculinity and Table 14 where the amount of foreign students studying in the United States is used to determine masculinity.

To look at United States exports first, the trade variance can be explained by an increased amount of foreign study for both Americans studying abroad and the amount of foreign students studying in the United States. As international education increases so does the amount of United States goods and services bought by foreign countries.

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A higher state of power distance is beneficial for the buying of United States goods and services for both tables. With the regions that have had long standing trade relationships with the United States, it is the countries that are not members of the WTO and accept a high degree of power distance so that there is an inequality of power between them and the United States that are the buyers of United States goods and services.

These are the two and only two important explanatory variables when using the amount of foreign students studying in the United States as an indicator of masculinity. They explain all the trade variance used by these variables since all other factors such as individualism, population, uncertainty avoidance, and regions such as Europe and Latin America have no significant relationship with the increased sale of United States goods and services. Therefore, with countries that have long standing trade relationships, international education and a high level of power distance are the important factors for gauging future trade success.

This differs a bit when looking at the number of Americans studying abroad as the indicator of masculinity. Individualism still has no significant relationships just as uncertainty avoidance has no significant relationship. Population has a positive correlation meaning that the larger the country is the more it buys United States goods and services in these three regions.

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Figure 6 Cultural Change and Regional Performance for Europe, Latin America, Africa

United States Exports

TRADE PERFORRMANE Masculinity Power Distance Population

Uncertainty Avoidance

Europe Latin America Individualism

Americans Studying Abroad

TRADE PERFORRMANE Masculinity

Individualism Population Uncertainty Avoidance

Europe Latin America

Power Distance

Foreign Students in the United States

United States Imports

TRADE PERFORRMANE Masculinity Power Distance Population

Uncertainty Avoidance

Europe Latin America

Individualism

Americans Studying Abroad

TRADE PERFORRMANE Masculinity

Individualism Population Uncertainty Avoidance

Europe Latin America

Power Distance

Foreign Students in the United States

United States Balance of Trade

TRADE PERFORRMANE Masculinity Population Europe Latin America Individualism

Power Distance

Uncertainty Avoidance

Americans Studying Abroad

TRADE PERFORRMANE Masculinity Population Europe Latin America

Power Distance

Individualism Uncertainty

Avoidance

Foreign Students in the United States

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Regionally, Europe and Latin America are buying more goods and services than Africa.

This is due to the simple fact that Europe and Latin America are important trading partners while Africa at the time was not.

Looking at United States imports, the same type of relationship between the cultural and regional variables can be seen when the number of foreign students studying in the United States is used as the indicator for masculinity. Number of foreign students becomes the dominant explanatory variable while countries that have a high level of uncertainty avoidance is second to the explanation of which types of countries sell most goods and services to the United States.

Foreign students coming into the United States that are from countries that are not WTO members are import markets for the selling of goods and services to the United States from Europe, Latin America, and Africa.

When the number of Americans studying abroad is used as an indicator for masculinity, the same pattern is seen for United States exports. Countries that exhibit high masculinity by recruiting and hosting American students, exhibit high uncertainty avoidance by not joining the WTO, and have large populations are countries that are selling goods and services to the United States the most. Again the relationship between individualism by the number of disputes filed by countries in the WTO and the level of uncertainty avoidance used by seeing which countries share the commonality of language with the United States are not significant indicators of trade performance.

Regionally, Europe and Latin America are selling more goods and services to the United States than Africa that was used as a baseline. Since the number of Americans studying abroad is as dominant for explaining the trade variance, the relationship between the amount of goods and services that are sold to the United States between Europe and Latin America when compared to Africa can more readily be seen.

When comparing the balance of trade between the two tables, the variables of masculinity and power distance have the same relationship. The higher the level of masculinity by either hosting American students or sending foreign students to the United States to study and the lowering of power distance, the greater the trade deficit for the United States. American students are too small in number to compete with the number of foreign students coming from other countries in these regions to make a trade surplus. While high power distance increases trade for the United States, it increases the amount of good and services sold to the United States more

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than it increases the number of United States goods and services bought by foreign countries thereby increasing the United States trade deficit.

For both sets of tables, there is no significant relationship between individualism through the amount of disputes filed within the WTO and uncertainty avoidance felt by the commonality of language or lack thereof and the explanation of trade variance.

When Americans studying abroad is used as an indicator of masculinity, population has in inverse relationship with the balance of trade meaning that the larger the country is, the more it produces a trade deficit. When the amount of foreign students studying in the United States is used as a measure of masculinity, population has a positive correlation with trade surplus. The larger a country is the more it is producing a trade surplus for the United States.

Regionally when the number of Americans studying abroad is used as an indicator of masculinity, Africa produces more of a trade surplus than Europe and Latin America. Europe and Latin America are selling more than they are buying. Americans are studying at these countries which are selling more than they are buying. This basically means that Americans are importing more goods from Europe and Latin America than they are selling to those two regions.

The United States is not buying many products from Africa or at least Africa is buying more products than it is selling to the United States.

This direction changes when the number of foreign students studying abroad is used as an indicator for masculinity; the direction changes to a positive correlation between increased trade surplus for the United States and trade with Europe and Latin America when compared with Africa as the baseline.

Foreign students are coming from countries in Europe and Latin America that sell more goods to the United States than buys. Countries with long-standing trade relationships and that buy more goods from the United States than they sell to the United States are sending students to the United States. When foreign students come to the United States to study they get to know the United States’ market and buy United States goods and services to import back to their countries. This trend is creating a trade surplus.

Again, the R² is higher when the number of foreign students studying abroad is used as an indicator of masculinity. These three regions boast the largest number of American students, which are mostly going to Europe and secondly to Latin America. The number is still lower

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when compared with the number of students coming into the United States from Latin America and Africa, therefore the other cultural variables become more significant.

The number of foreign students studying abroad is the dominant explanatory variable for when explaining trade variance. Power distance explains the rest of the trade variance in this model, though when looking at the balance of trade, population and regional differences have to be looked at to explain changes in trade surpluses and deficits of the United States. The importance of these two measures stays true for the regressions of all three regions of the study.

Most of the countries in this region have been long time members of the WTO, therefore, the relationship between the number of disputes filed against other member countries in the WTO used to measure individualism is not a good indicator of cultural change because the trading partners have learned how to successfully trade with each other after repeated actions of the game. The long length of time of the trading relationships between the countries in these regions and the United States also plays a factor for making the measure of uncertainty avoidance by using the commonality of English as a factor statistically insignificant. Due to repeated trading transactions, the level of uncertainty avoidance is not relevant when looking at language because the trading relationships in play now have existed for centuries. Therefore, uncertainty avoidance in terms of language is only a good explanatory variable when looking at regions that have had shorter durations of international trade partnerships with the United States.

Population was relevantly significant for all three sets of regression. It can explain more of the variation of trade performance when the number of Americans studying abroad is used to measure masculinity since this measure of masculinity is less dominant. It was an important indicator in the six region regression model and the regression model run for Asia, Southeast Asia & Oceania, and the Middle East where the types of economies that differ from the United States exist. Even when studying Europe, Latin America, and Africa, it is still a relevant variable for explaining cultural change. It must be remembered that cultural change takes time and the larger the population of an area, the slower the rate of change for the people who live there to learn different mental models. Population has up until now, not been included in cultural studies.

To gauge where a country or region exhibits itself on a cultural scale, it should be included.

When looking at institutional change and cultural understanding, it is not enough to just gauge countries and then see if they rate similarly. Countries should be examined according to regions based on different measures such as geography, religious beliefs, historical teachings, etc.

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This will provide a better explanation of why countries or regions are changing their cultures due their self-interest of making a profit. It has been shown that a regional analysis can raise the accuracy of explaining trade variance.

Further Recommendations

The use of Hofstede’s original four dimensions was used to test this model for validity.

Now that it can be seen that cultural change can show its effects by changing trade performance, the cultural dimensions of the other more recent social scientists can be used to see if a more accurate indication of cultural change can be shown through the measurement of trade performance.

There was a problem of colinearity when trying to do a study to measure each country in one region due to the fact that many dummy variables were used. It is recommended that the number of dummy variables be kept to a minimum so that a more extensive regional analysis can be performed. For example, the use of English officially could be the percentage of a country that speaks English or the score of the countries English on a TOEIC test rather than using one if the country uses English officially or zero if it does not.

Another way around this problem and a recommendation for the study is to increase the sample size. A much high sample would eliminate the problems of colinearity. It would also provide more information about how multiple countries around the world in different regions are changing their culture during the time of institutional reform.

Not only the period of institutional reform needs to be studied. The era of terrorism, the era of the cold war, or any other time period could be used to gauge the rate of cultural change at historically or at present. This would provide further insights into what factors might cause countries to change their institutions. Multiple time periods and eras can be combined and correlated against major world events to see any possible relationships.

Due to the fact that this study was based on beliefs from the neo-institutional school of economics, it is known that geographical differences also might explain variances in trade such as whether a country is land-locked or not, amount of shipping ports, amount of airports, amount of fuel consumed due to transportation differences, among others to see if the explanation of trade variance could be improved.

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This study used a time-series regression that ran all variables simultaneously. In the future, the variables could be run separately to see if the degree of explanation on trade variance can be attributed more or less to one individual variable.

The final recommendation is that instead of altering the independent variables, a different dependent variable can be used. The trade performance chosen for this study were exports, imports, and export-minus imports otherwise known as balance of trade. This can be changed to GDP or GNP to see if there is a better dependent variable to measure institutional and regional change.

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Figure 6 Cultural Change and Regional Performance for Europe, Latin America, Africa

Figure 6

Cultural Change and Regional Performance for Europe, Latin America, Africa p.14

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