Foreign Languages and Trade

27 Pages Posted: 21 Mar 2014  

Jan Fidrmuc

Brunel University - Department of Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Jarko Fidrmuc

Zeppelin University Friedrichshafen

Multiple version iconThere are 2 versions of this paper

Date Written: February 25, 2014

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.

Keywords: gravity model, foreign trade, economics of languages, natural experiment, median regression, quantile regression

JEL Classification: C230, F150, F400, Z100

Suggested Citation

Fidrmuc, Jan and Fidrmuc, Jarko, Foreign Languages and Trade (February 25, 2014). CESifo Working Paper Series No. 4670. Available at SSRN: https://ssrn.com/abstract=2411407

Jan Fidrmuc (Contact Author)

Brunel University - Department of Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom
+44 1895 266 528 (Phone)
+44 1895 269 770 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Jarko Fidrmuc

Zeppelin University Friedrichshafen ( email )

Am Seemooser Horn 20
Friedrichshafen, 88045
Germany

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