Analysis shows language enhances trade in regions with colonial ties, suggesting shifting trends in communication methods.
Abstract This paper investigates the role of language in shaping international trade patterns between 2000 and 2019, a period marked by the emergence of Asia as a central player in global commerce. Drawing on a panel of bilateral export data for 185 countries, we combine a two-step structural gravity model with detailed linguistic indicators from the Domestic and International Common Language (DICL) database. We distinguish between official, native, and acquired language links, as well as linguistic proximity measures, to assess how different types of linguistic affinity affect trade. The results reveal that shared official and native languages significantly enhance trade flows, but their effects are concentrated in regions with strong colonial or institutional ties, such as Europe, Africa, and the Americas. In contrast, acquired language proficiency and linguistic proximity have become increasingly important, especially in Asia. Temporal analysis further shows a decline in the influence of native language alignment and a rise in the trade-enhancing role of acquired languages over time. These findings support the view that while historical linguistic ties remain relevant, global trade is gradually shifting toward more flexible modes of communication. The paper contributes to the literature by documenting both regional and temporal heterogeneity in language effects, highlighting the strategic importance of linguistic capacity in today’s interconnected trade landscape. JEL: F14; F15; C23, Z13
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Ticiana Grecco Zanon Moura (2025) studied this question.