Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform

25 Pages Posted: 30 Jul 2018 Last revised: 16 Dec 2018

See all articles by Erik Brynjolfsson

Erik Brynjolfsson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Xiang Hui

Washington University in St. Louis - John M. Olin Business School

Meng Liu

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Washington University in St. Louis

Date Written: July 6, 2018

Abstract

Artificial intelligence (AI) is surpassing human performance in a growing number of domains. However, there is limited evidence of its economic effects. Using data from a digital platform, we study a key application of AI: machine translation. We find that the introduction of an upgraded machine translation system has significantly increased international trade on this platform, increasing exports by 10.9%. Furthermore, heterogeneous treatment effects are consistent with a substantial reduction in translation costs. Our results provide causal evidence that language barriers significantly hinder trade and that AI has already begun to improve economic efficiency in at least one domain.

Keywords: Artificial Intelligence, International Trade, Machine Translation, Machine Learning, Digital Platforms

Suggested Citation

Brynjolfsson, Erik and Hui, Xiang and Liu, Meng, Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform (July 6, 2018). Available at SSRN: https://ssrn.com/abstract=3210383 or http://dx.doi.org/10.2139/ssrn.3210383

Erik Brynjolfsson

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E53-313
Cambridge, MA 02142
United States
617-253-4319 (Phone)

HOME PAGE: http://digital.mit.edu/erik

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Xiang Hui (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Meng Liu

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02139
United States

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

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