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International trade, foreign direct investment, and transaction costs in languages

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  • Oh, Chang Hoon
  • Travis Selmier, W.
  • Lien, Donald

Abstract

We examine the roles of major trade languages in international trade and foreign direct investment (FDI) flows. Empirical results confirm that speaking a common language increases trade and FDI flows, yet the effect of major languages is more substantial in FDI than in international trade. In addition, we find evidence of a hierarchy in transaction costs of major languages in both trade and FDI.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 40 (2011)
Issue (Month): 6 ()
Pages: 732-735

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Handle: RePEc:eee:soceco:v:40:y:2011:i:6:p:732-735

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Language; Gravity equation; International trade; Foreign direct investment; Transaction costs;

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References

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  1. Oh, Chang Hoon & Selmier II, W. Travis, 2008. "Expanding international trade beyond the RTA border: The case of ASEAN's economic diplomacy," Economics Letters, Elsevier, vol. 100(3), pages 385-387, September.
  2. Baldwin, Richard, 2007. "Trade Effects of the Euro: a Comparison of Estimators," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 780-818.
  3. Victor Ginsburgh & Ignacio Ortuno-Ortin & Shlomo Weber, 2007. "Learning foreign languages: theoretical and empirical implications of the Selten and Pool model," ULB Institutional Repository 2013/7274, ULB -- Universite Libre de Bruxelles.
  4. Petroulas, Pavlos, 2007. "The effect of the euro on foreign direct investment," European Economic Review, Elsevier, vol. 51(6), pages 1468-1491, August.
  5. Jacques Melitz, 2003. "Language and Foreign Trade," Working Papers 2003-26, Centre de Recherche en Economie et Statistique.
  6. Subramanian, Arvind & Wei, Shang-Jin, 2005. "The WTO Promotes Trade, Strongly But Unevenly," CEPR Discussion Papers 5122, C.E.P.R. Discussion Papers.
  7. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-98, November.
  8. Agnès Bénassy-Quéré & Maylis Coupet & Thierry Mayer, 2005. "Institutional Determinants of Foreign Direct Investment," Working Papers 2005-05, CEPII research center.
  9. Edward P. Lazear, 1995. "Culture and Language," NBER Working Papers 5249, National Bureau of Economic Research, Inc.
  10. Michael A Shields & Stephen Wheatley Price, . "The English Language Fluency and Occupational Success of Ethnic Minority Immigrant Men Living in English Metropolitan Areas," Discussion Papers in Public Sector Economics 99/4, Department of Economics, University of Leicester.
  11. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 246-88, April.
  12. Casale, Daniela & Posel, Dorrit, 2011. "English language proficiency and earnings in a developing country: The case of South Africa," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(4), pages 385-393, August.
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Cited by:
  1. Di Paolo, Antonio & Tansel, Aysit, 2013. "Returns to Foreign Language Skills in a Developing Country: The Case of Turkey," MPRA Paper 51237, University Library of Munich, Germany.

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