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

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

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620175

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  8. 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.
  9. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S95-S126, December.
  10. Petroulas, Pavlos, 2004. "The Effect of the Euro on Foreign Direct Investment," Research Papers in Economics 2004:5, Stockholm University, Department of Economics.
  11. 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.
  12. 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.
  13. 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.
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