This paper presents a simple model where microfounded dynamics of cultural identity are endogenous and interact with an international trade equilibrium. This process generates a strong home bias under autarky. We then show that goods market integration causes a phenomenon of cultural divergence,...

The process of globalization is characterized by an impressive growth in global value chains, as well as the proliferation of non-governmental organizations (NGOs) interacting with production and sourcing decisions of multinational firms. In this paper, we present a simple North-South model of...