Native Language and Acquired Language as Determinants of Product‐Level Trade

Abstract

The present paper estimates response parameters of bilateral export flows at the disaggregated Harmonised System 6‐digit level to two fractional variables reflecting the language commonality between exporting and importing countries common native language versus common acquired language. In particular, the response to common acquired language is shown to vary systematically with the price (and trade) elasticity of demand across products and with the degree of product differentiation and competition across products. These findings support the notion that there is a relatively important role to play for foreign‐language acquisition in stimulating cross‐border trade and international integration, which are known to induce (average) consumer gains.

Keywords: Cultural proximity, International trade, Languages