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Foreign languages and trade: evidence from a natural experiment

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Abstract

Cultural factors and common languages are well-known determinants of trade. By contrast, the knowledge of foreign languages was not explored in the literature so far. We combine traditional gravity models with data on fluency in the main languages used in EU and candidate countries. We show that widespread knowledge of languages is an important determinant for foreign trade, with English playing an especially important role. The robustness of our results is confirmed by quantile regressions. Copyright The Author(s) 2016

Suggested Citation

  • Jan Fidrmuc & Jarko Fidrmuc, 2016. "Foreign languages and trade: evidence from a natural experiment," Empirical Economics, Springer, vol. 50(1), pages 31-49, February.
    • Handle: RePEc:spr:empeco:v:50:y:2016:i:1:p:31-49
    DOI: 10.1007/s00181-015-0999-7
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    More about this item

    Keywords

    Gravity model; Foreign trade; Economics of languages; Natural experiment; Median regression; Quantile regression; C23; F15; F40; Z10;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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