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Foreign Languages and Trade

Author

Listed:
  • Jan Fidrmuc
  • Jarko Fidrmuc

Abstract

Cultural factors and especially common languages are well-known determinants of trade. By contrast, the knowledge of foreign languages was not explored in the literature so far. We combine traditional gravity models with data on fluency in the main languages used in EU and candidate countries. We show that widespread knowledge of languages is an important determinant for foreign trade, with English playing an especially important role. The robustness of our results is confirmed by a natural experiment of trade between Eastern and Western Europe.

Suggested Citation

  • Jan Fidrmuc & Jarko Fidrmuc, 2014. "Foreign Languages and Trade," CESifo Working Paper Series 4670, CESifo.
    • Handle: RePEc:ces:ceswps:_4670
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nicolas Sauter, 2012. "Talking trade: language barriers in intra-Canadian commerce," Empirical Economics, Springer, vol. 42(1), pages 301-323, February.
    2. Antonio Di Paolo & Aysit Tansel, 2015. "Returns to Foreign Language Skills in a Developing Country: The Case of Turkey," Journal of Development Studies, Taylor & Francis Journals, vol. 51(4), pages 407-421, April.
    3. Brindusa Anghel & Antonio Cabrales & Jesus M. Carro, 2016. "Evaluating A Bilingual Education Program In Spain: The Impact Beyond Foreign Language Learning," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1202-1223, April.
    4. Ingo E. Isphording, 2013. "Returns to Foreign Language Skills of Immigrants in Spain," LABOUR, CEIS, vol. 27(4), pages 443-461, December.
    5. Donald Lien & Yaqin Wang, 2013. "An economic analysis of instructional language," Education Economics, Taylor & Francis Journals, vol. 21(4), pages 380-391, September.
    6. Peter Egger & Andrea Lassmann, 2014. "Cultural Integration and Export Variety Overlap Across Countries," CESifo Working Paper Series 4800, CESifo.
    7. repec:zbw:rwirep:0398 is not listed on IDEAS
    8. Paniagua, Jordi & Figueiredo, Erik & Sapena, Juan, 2015. "Quantile regression for the FDI gravity equation," Journal of Business Research, Elsevier, vol. 68(7), pages 1512-1518.
    9. Isphording, Ingo, 2013. "Returns to Local and Foreign Language Skills – Causal Evidence from Spain," Ruhr Economic Papers 398, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Jarko Fidrmuc & Matus Senaj, 2012. "Human Capital, Consumption, and Housing Wealth in Transition," Working and Discussion Papers WP 2/2012, Research Department, National Bank of Slovakia.
    11. Helble, Matthias & Ngiang, Boon-Loong, 2016. "From global factory to global mall? East Asia’s changing trade composition and orientation," Japan and the World Economy, Elsevier, vol. 39(C), pages 37-47.
    12. Herrmann-Pillath, Carsten & Libman, Alexander & Yu, Xiaofan, 2014. "Economic integration in China: Politics and culture," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 470-492.
    13. Daria Ciriaci & Alessandro Muscio, 2011. "University choice, research quality and graduates' employability: Evidence from Italian national survey data," Working Papers 48, AlmaLaurea Inter-University Consortium.
    14. Brindusa Anghel & Antonio Cabrales & Jesus M. Carro, 2016. "Evaluating A Bilingual Education Program In Spain: The Impact Beyond Foreign Language Learning," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1202-1223, April.
    15. König, Jörg & Ohr, Renate, 2011. "Small but beautiful? Economic impacts of the size of nations in the European Union," University of Göttingen Working Papers in Economics 128, University of Goettingen, Department of Economics.
    16. 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.
    17. Antonio Di Paolo & Aysit Tansel, 2015. "Returns to Foreign Language Skills in a Developing Country: The Case of Turkey," Journal of Development Studies, Taylor & Francis Journals, vol. 51(4), pages 407-421, April.
    18. Helble, Matthias & Ngiang, Boon-Loong, 2014. "From Global Factory to Global Mall: East Asia’s Changing Trade Composition," ADBI Working Papers 496, Asian Development Bank Institute.
    19. repec:got:cegedp:128 is not listed on IDEAS
    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. Rupérez Micola, Augusto & Aparicio Fenoll, Ainoa & Banal-Estañol, Albert & Bris, Arturo, 2019. "TV or not TV? The impact of subtitling on English skills," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 487-499.
    22. Augusto Rupérez Micola & Ainhoa Aparicio Fenoll & Albert Banal-Estañol & Arturo Bris, 2016. "TV or not TV? The impact of subtitling on English skills," Carlo Alberto Notebooks 491, Collegio Carlo Alberto.

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    More about this item

    Keywords

    gravity model; foreign trade; economics of languages; natural experiment; median regression; quantile regression;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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