Cultural diversity and cultural trade: theory and an application to the motion picture industry

The relationship between trade liberalisation and cultural diversity is a long-standing and controversial issue in many countries that strive to promote free flow of cultural trade as well as to sustain local cultural production. The controversy is partly attributable to multiple meanings attached to the notion of cultural diversity. In this paper we propose three operational definitions of cultural diversity relevant in the context of international cultural trade: national, inter-national and global cultural diversity. We suggest measures of these three types of cultural diversity and apply them to data for the global motion picture industry covering 37 countries/regions for years 2009–2019. We argue that the three types of cultural diversity may operate in opposite directions as a result of lower trade barriers. The paper concludes by considering the implications for cultural policy arising from our analysis.