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Does a Lingua Franca matter in bilateral international trade?

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  • Li Su
  • Hojin Jung
  • Mingzhuo Yang

Abstract

This article explores the impact of language proficiency on international trade by using panel data analysis. To do so, we construct a time‐variant test‐score‐based measure of common language. Controlling for the standard gravity model variables, we find strong empirical evidence that English proficiency promotes bilateral trade flows through facilitating direct communication. We confirm that this finding is robust even when we estimate its effects separately on goods and services trade flows at a disaggregated level. Furthermore, we show that institutional similarities between trading partners play a role that is similar to communication easiness in trade. Our study provides a policy implication for government support for attaining second language fluency.

Suggested Citation

  • Li Su & Hojin Jung & Mingzhuo Yang, 2023. "Does a Lingua Franca matter in bilateral international trade?," International Studies of Economics, John Wiley & Sons, vol. 18(1), pages 80-96, March.
    • Handle: RePEc:wly:intsec:v:18:y:2023:i:1:p:80-96
    DOI: 10.1002/ise3.23
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    Cited by:

    1. Zhang, Yuanyuan & Sun, Wenli & Du, Yaning, 2024. "Lingua franca proficiency and cross-border mergers and acquisitions: Language matters," Finance Research Letters, Elsevier, vol. 66(C).

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