New research explores the role of communication through spoken native and second languages in reducing non-tariff international trade barriers. The study investigates the available bilateral trade evidence to quantify those effects empirically.
The results indicate that the emergence of a global trading language (that is, English) and even regional languages (Spanish, French, Arabic) contribute to reducing the language barriers to trade. Indeed, the researchers find that the effect of indirect communication through a non-native language is larger than that of a shared native spoken language.
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There is growing recognition that language affects bilateral trade through multiple channels, as most current estimated gravity trade models include almost by default a language variable.
Previous studies looking at the effects of language in bilateral trade have focused on shared (official or spoken) native languages or on more gradient measures of linguistic proximity across native languages, showing that those countries sharing a common language (or a typologically similar language) are more likely to trade with each other. Yet the interpretation of the existing findings on the role that communication plays in facilitating trade remains an open question.
The new study investigates the impact of non-native languages (or second languages) on trade incorporating explicit interactions with factors such as literacy and linguistic diversity that influence the marginal returns to communication on a shared language. The authors also put a special focus on the role of English as the global lingua franca most often used in international trade.
The results present evidence that the emergence of a global trading language (that is, English) and even regional languages (Spanish, French, Arabic) contribute to reducing the language barriers to trade. Indeed, the researchers find that the effect of indirect communication through a non-native language is larger than that of a shared native spoken language.
But they also show that these effects of communication through non-native languages are nonlinear indicating decreasing marginal returns to indirect communication.
The researchers also explore measures of linguistic similarity as a gauge of the effect of language distance on bilateral trade. Linguistics research relates the origin of modern languages to a common ancestor (probably originating in Africa) from which modern languages would derive.
Current languages would have evolved from this ‘first’ language, partly through migration and adaptation to new environments but also randomly, by gaining or losing some of their intrinsic characteristics, such as increasing o reducing their phonemic inventories, creating new ways of forming words, etc.; hence, increasing the burdens on communication across speakers of different languages.
The researchers explore the available data on language similarity and find that linguistic distance increases the non-pecuniary costs of trade. These results illustrate how communication and bilateral trade are influenced by language in more ways than what a shared common language (native or non-native) alone can account for.
ENDS
Contact information:
Enrique Martínez-García (corresponding author), Federal Reserve Bank of Dallas, 2200 N. Pearl Street, Dallas, TX 75201. +214-922-5262. emg.economics (at) gmail.com. https://sites.google.com/view/emgeconomics/.
María Teresa Martínez-García, Department of Spanish, College of Occidental Languages, Hankuk University of Foreign Studies, 107, Imun-ro, Dongdaemun-gu, Seoul, 130-791, Republic of Korea. mtmg87 (at) gmail (dot) com. http://maitemartinez.altervista.org/