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

14 Pages Posted: 20 Jul 2018

See all articles by Peter H. Egger

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; ETH Zurich; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Farid Toubal

Université Paris-Dauphine, PSL Research University; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII); Centre for Economic Policy Research (CEPR)

Date Written: July 2018

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

Suggested Citation

Egger, Peter H. and Toubal, Farid, Native Language and Acquired Language as Determinants of Product‐Level Trade (July 2018). The World Economy, Vol. 41, Issue 7, pp. 1833-1846, 2018, Available at SSRN: https://ssrn.com/abstract=3216837 or http://dx.doi.org/10.1111/twec.12647

Peter H. Egger (Contact Author)

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

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Farid Toubal

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Centre for Economic Policy Research (CEPR) ( email )

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