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www.vanderbilt.edu/econ Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade

By  and William K. Hutchinson and William K. Hutchinson

Abstract

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 considered Which products are traded among countries and the volume of trade in these products are two questions that have captured the attention of international trade economists for more than two centuries. Ricardo, Mill, Heckscher, Ohlin, and others have focused on determining which products would be exported and which would be imported. In the 1960s interest shifted to determining the volume of trade and the work of Tinbergen (1962) and Linnemann (1966) are early examples of such studies. Models of these two aspects of trade, however, are quit

Year: 2002
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