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Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade

  • William K. Hutchinson

    ()

    (Department of Economics, Vanderbilt University)

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    Gravity model explanations of trade volumes frequently include dummy variables to account for the commonality of language among trading partners. In this paper we use a data set for the number of people in a country who speak English as a first language or English as a second language (Crystal, 1997) as an indicator of the ease with which trade with the United States occurs. Controlling for commodity fixed effects we use SITC three digit industry data centered on 1995 United States bilateral trade with 33 countries to determine the effect of the degree of language commonality on bilateral trade. Both English as a first language and English as a second language are found to be more important for exports than for imports. This is true for all three digit industries as well as when the specific industry groups identified in Rauch (1999) are considere

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    Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0217.

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    Date of creation: Jun 2002
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    Handle: RePEc:van:wpaper:0217
    Contact details of provider: Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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    14. Wagner, Don & Head, Keith & Ries, John, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 507-25, December.
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    16. James E. Rauch & Vitor Trindade, 1999. "Ethnic Chinese Networks in International Trade," NBER Working Papers 7189, National Bureau of Economic Research, Inc.
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