IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2021-008.html
   My bibliography  Save this paper

Learn German, Buy German? Language-learning opportunities abroad and exports

Author

Listed:
  • Omar Martin Fieles-Ahmad

    (Otto von Guericke University Magdeburg)

  • Matthias Huber

    (Friedrich Schiller University Jena)

Abstract

Using data on the presence of the Goethe Institutes (GI) in 134 importer countries between 1978 and 2014, we study the effect that language learning opportunities abroad have on German exports. We employ a gravity model of trade with a single exporter and use the Poisson-Pseudo Maximum Likelihood (PPML) estimator to measure the relationship of interest. To gauge the importance of potential reverse causality, we also estimate the effect that institutes have on Swiss exports. Our findings for both Germany and German-speaking Swiss cantons show that institutes do stimulate exports to GI-hosting countries, but that this effect is confined to institutes offering language training services, which suggests that language requirements and acquisition underlie the positive link found between institutes and exports. This reading of our findings receives further support in additional explorations, where we study exports differentiated by Rauch (1999) product categories to account for differing communication requirements in trading.

Suggested Citation

  • Omar Martin Fieles-Ahmad & Matthias Huber, 2021. "Learn German, Buy German? Language-learning opportunities abroad and exports," Jena Economics Research Papers 2021-008, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2021-008
    as

    Download full text from publisher

    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2021/wp_2021_008.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    2. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    3. Felbermayr, Gabriel J. & Toubal, Farid, 2010. "Cultural proximity and trade," European Economic Review, Elsevier, vol. 54(2), pages 279-293, February.
    4. Egger, Peter H. & Lassmann, Andrea, 2012. "The language effect in international trade: A meta-analysis," Economics Letters, Elsevier, vol. 116(2), pages 221-224.
    5. Victor Ginsburgh & Jacques Melitz & Farid Toubal, 2017. "Foreign Language Learning and Trade," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 320-361, May.
    6. Sucharita Ghosh & Donald Lien & Steven Yamarik, 2017. "Does the Confucius Institute Network Impact Cultural Distance? A Panel Data Analysis of Cross-Border Flows in and out of China," Asian Economic Journal, East Asian Economic Association, vol. 31(3), pages 299-323, September.
    7. W. Travis Selmier & Chang Hoon Oh, 2013. "The Power of Major Trade Languages in Trade and Foreign Direct Investment," Review of International Political Economy, Taylor & Francis Journals, vol. 20(3), pages 486-514, June.
    8. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    9. Erik Brynjolfsson & Xiang Hui & Meng Liu, 2019. "Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform," Management Science, INFORMS, vol. 65(12), pages 5449-5460, December.
    10. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    11. Lien, Donald & Lo, Melody, 2017. "Economic impacts of cultural institutes," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 12-21.
    12. Donald Lien & Melody Lo & David Bojanic, 2019. "Asymmetric effects of cultural institutes on trade and foreign direct investment," The World Economy, Wiley Blackwell, vol. 42(5), pages 1520-1553, May.
    13. Victor Ginsburgh & Shlomo Weber, 2016. "The Palgrave Handbook of Economics and Language," ULB Institutional Repository 2013/277408, ULB -- Universite Libre de Bruxelles.
    14. Michel Fouquin & Jules Hugot, 2016. "Two Centuries of Bilateral Trade and Gravity data: 1827-2014," Vniversitas Económica 15129, Universidad Javeriana - Bogotá.
    15. Lien, Donald & Oh, Chang Hoon & Selmier, W. Travis, 2012. "Confucius institute effects on China's trade and FDI: Isn't it delightful when folks afar study Hanyu?," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 147-155.
    16. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    17. Silke Uebelmesser & Matthias Huber & Severin Weingarten, 2018. "The German Language Worldwide: a New Data Set on Language Learning," CESifo Economic Studies, CESifo, vol. 64(1), pages 103-121.
    18. Lien, Donald & Oh, Chang Hoon, 2014. "Determinants of the Confucius Institute establishment," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(3), pages 437-441.
    19. Jaschke, Philipp & Keita, Sekou, 2021. "Say it like Goethe: Language learning facilities abroad and the self-selection of immigrants," Journal of Development Economics, Elsevier, vol. 149(C).
    20. Jan Fidrmuc & Jarko Fidrmuc, 2016. "Foreign languages and trade: evidence from a natural experiment," Empirical Economics, Springer, vol. 50(1), pages 31-49, February.
    21. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Omar Martin Fieles‐Ahmad & Matthias Huber, 2022. "Learn German, Buy German? Language‐learning opportunities abroad and exports," The World Economy, Wiley Blackwell, vol. 45(10), pages 3031-3058, October.
    2. Firat Demir & Hyeonjin Im, 2020. "Effects of cultural institutes on bilateral trade and FDI flows: Cultural diplomacy or economic altruism?," The World Economy, Wiley Blackwell, vol. 43(9), pages 2463-2489, September.
    3. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    4. Steven Yamarik & Mariya Mileva, 2023. "Cultural institutes: Networks and determinants," The World Economy, Wiley Blackwell, vol. 46(4), pages 1119-1143, April.
    5. Rindler, Michael, 2021. "Changing Language Skills and Trade in Europe," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242449, Verein für Socialpolitik / German Economic Association.
    6. Erick Kitenge & Sajal Lahiri, 2022. "Is the Internet bringing down language‐based barriers to international trade?," Review of International Economics, Wiley Blackwell, vol. 30(2), pages 566-605, May.
    7. Frank, Jonas, 2018. "The effect of culture on trade over time: New evidence from the GLOBE data set," Hohenheim Discussion Papers in Business, Economics and Social Sciences 18-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    8. Amir Maghssudipour & Marco Bellandi & Annalisa Caloffi, 2023. "The role of language in international trade and the “made in Italy”," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 677-702, September.
    9. Helene Tenzer & Siri Terjesen & Anne-Wil Harzing, 2017. "Language in International Business: A Review and Agenda for Future Research," Management International Review, Springer, vol. 57(6), pages 815-854, December.
    10. Donald Lien & Melody Lo & David Bojanic, 2019. "Asymmetric effects of cultural institutes on trade and foreign direct investment," The World Economy, Wiley Blackwell, vol. 42(5), pages 1520-1553, May.
    11. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    12. Alex Korff & Nico Steffen, 2022. "Economic preferences and trade outcomes," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 253-304, February.
    13. Cheng, Hua & Hu, Cui & Li, Ben G., 2020. "Lexicographic biases in international trade," Journal of International Economics, Elsevier, vol. 126(C).
    14. Korff, Alex & Steffen, Nico, 2019. "Economic preferences and trade outcomes," DICE Discussion Papers 321, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    15. Fensore, Irene & Legge, Stefan & Schmid, Lukas, 2022. "Ancestry and international trade," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 33-51.
    16. Victor Ginsburgh & Shlomo Weber, 2020. "The Economics of Language," Journal of Economic Literature, American Economic Association, vol. 58(2), pages 348-404, June.
    17. Lücke, Matthias & Stöhr, Tobias, 2015. "Heterogeneous Immigrants and Foreign Direct Investment: The Role of Language Skills," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113191, Verein für Socialpolitik / German Economic Association.
    18. Mauro Lanati & Alessandra Venturini, 2021. "Cultural change and the migration choice," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 799-852, November.
    19. Peter H. Egger & Andrea Lassmann, 2015. "The Causal Impact of Common Native Language on International Trade: Evidence from a Spatial Regression Discontinuity Design," Economic Journal, Royal Economic Society, vol. 0(584), pages 699-745, May.
    20. Tamara Gurevitch & Peter R. Herman & Farid Toubal & Yoto Yotov, 2020. "One Nation, One Language? Domestic Language Diversity, Trade and Welfare," Working Papers 2020-15, CEPII research center.

    More about this item

    Keywords

    gravity model; foreign trade; language; cultural institute;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2021-008. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Markus Pasche (email available below). General contact details of provider: http://www.jenecon.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.