Does cultural diversity contribute to the sustainable development of trade? Empirical evidence from 288 Chinese cities

There is mounting theoretical and empirical research that explains the reasons for the rapid expansion of China's export trade, but they mostly ignore the effects of cultural differences. To fill this gap, this paper provides an empirical investigation of how cultural diversity affects the sustainable development of trade, which is defined as the goal of maintaining certain volume of trade and making trade growth sustainable. The findings are as follows. (1) Cultural diversity can significantly promote the sustainable development of trade. (2) Entrepreneurship is the possible channel wherein cultural diversity affects the sustainable development of trade, including innovation entrepreneurship and business entrepreneurship. (3) Further studies demonstrate that economic openness has a significant moderating effect on the relationship between cultural diversity and the sustainable development of trade. That is, the higher the level of openness of a city, the stronger the promotion of cultural diversity to the sustainable development of trade. This study not only deepens understanding on the relationship between culture and trade but also provides important policy implications for many countries that have high migration rates.