Dynamic co-movement between economic growth and language: A new perspective of technological progress

Abstract

To investigate whether language complexity has significant effects on technological progress and economic growth, this paper not only improves a concise endogenous growth model with open economy in which reducing the degree of official language complexity can help one country gain rapid technological progress and economic growth in balanced growth path, but also applies stochastic frontier analysis (SFA) and two-way fixed effect model to investigate our hypothesis. Using the database ethnologue distributed by Lewis et al. (2014) and the Penn World Table 9.1 about 89 countries and regions from 1990 to 2018, we consider the number of verb conjugations of official language to be the indicator of language complexity, and examine its effects on technological change and economic growth. The empirical findings demonstrate that reducing language complexity has a significant positive effect and time-lag influence on technological change and economic output. Meanwhile, the positive effect of linguistic complexity on technological progress and economic growth is stronger for these countries with isolating languages than those with other language families, as well as for middle and low-income countries than high-income countries. For developing countries and these countries with isolating and agglutinative languages, they are urged to simplify their native language and reform the second language learning institution in schools in order to achieve a high level of development.