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"Linguistic Distance" as a Determinant of Bilateral Trade

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  • William K. Hutchinson

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    (Department of Economics, Vanderbilt University)

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    Abstract

    We introduce a measure of language difficulty called "linguistic distance" into a modified gravity model to determine whether the fact that a language is further away from English affects the level of trade. Our sample of 36 non-English speaking countries includes Japan and South Korea, which we argue are special cases due to World War II, the Korean War, and subsequent close political and economic ties with the United States. Presence of a stock of immigrants in the home country has been shown to enhance trade, both exports and imports, with the country of origin. Controlling for network and information attributes provided by the presence of a stock of immigrants, the special relationship with Japan and Korea, and the standard gravity model variables, we find that the further a country�s primary language is from English, the lower trade will be between the United States and that country. These results hold for aggregate exports and imports as well as for exports and imports of consumer manufactures and producer manufactures.

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    File URL: http://www.accessecon.com/pubs/VUECON/vu01-w30R.pdf
    File Function: Revised version, 2003
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    Bibliographic Info

    Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0130.

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    Date of creation: Dec 2001
    Date of revision: Oct 2003
    Handle: RePEc:van:wpaper:0130

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    Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

    Related research

    Keywords: Trade; information costs; immigration; gravity;

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    1. Dunlevy, James A, 1980. "A Test of the Capacity Pressure Hypothesis within a Simultaneous Equations Model of Export Performance," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 131-35, February.
    2. Raynold, Prosper & A. Dunlevy, James, 1998. "Aggregate Shocks and the Relationship between U.S. Business Cycle Fluctuations and Export Performance," Journal of Economic Integration, Center for Economic Integration, Sejong University, Center for Economic Integration, Sejong University, vol. 13, pages 163-198.
    3. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, Elsevier, vol. 53(1), pages 1-27, February.
    4. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    5. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 31(1), pages 47-62, February.
    6. Wagner, Don & Head, Keith & Ries, John, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 49(5), pages 507-25, December.
    7. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
    8. William K. Hutchinson, 2002. "Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0217, Vanderbilt University Department of Economics.
    9. Frankel, Jeffrey & Rose, Andrew K., 2001. "An Estimate of the Effect of Common Currencies on Trade and Income," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp01-013, Harvard University, John F. Kennedy School of Government.
    10. Dunlevy, James A. & Hutchinson, William K., 2001. "The Pro-Trade Effect of Immigration on American Exports During the Late Nineteenth and Early Twentieth Centuries," IZA Discussion Papers 375, Institute for the Study of Labor (IZA).
    11. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, American Economic Association, vol. 69(1), pages 106-16, March.
    12. Barry Eichengreen & Douglas A. Irwin, 1996. "The Role of History in Bilateral Trade Flows," NBER Working Papers 5565, National Bureau of Economic Research, Inc.
    13. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
    14. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 72, July.
    15. Dunlevy, James A. & Hutchinson, William K., 1999. "The Impact of Immigration on American Import Trade in the Late Nineteenth and Early Twentieth Centuries," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 59(04), pages 1043-1062, December.
    16. William K. Hutchinson & James A. Dunlevy, 2001. "The Pro-Trade Effect of Immigration on American Exports During Period 1870 to 1910," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0125, Vanderbilt University Department of Economics.
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    Cited by:
    1. Victor Ginsburgh & Shlomo Weber, 2013. "Culture, languages, and economics," ULB Institutional Repository 2013/152122, ULB -- Universite Libre de Bruxelles.

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