Cultural Distance

In M21-S2 - Article - Distance Still Matters Cultural distance is defined to be similarity in which a Country’s cultural attributes determine how people interact with one another and with companies and institutions.

Differences in religious beliefs, race, social norms, and language are all capable of creating distance between two countries. They can have a huge impact on trade: All other things being equal, trade between countries that share a language, for example, will be three times greater than between countries without a common language.