Abstract
Prior studies have investigated the role of economic and noneconomic variables on international trade. A major factor, which has been studied less, is the language used in transactions and negotiations. We explore the effects of language connectedness and the Arabic language on international trade in thirteen countries in the Middle East and North Africa (MENA) region. We used a panel of bilateral data and gravity model for the countries of the region over the 2000 to 2018 period. Our analytic technique was the Poisson pseudo-maximum-likelihood (PPML) estimation method. The empirical outcomes indicate that speaking Arabic leads to an increase in export, that is, Arab nations prefer to export to the countries whose people speak their language. In addition, the language connectedness index, which depends on the extent to which the country's languages are spoken outside the country, is positively associated with the levels of exports and imports. Results further show that the GDP, population of the destination country, and political co-stability have significant positive impacts on the bilateral exports. Additionally, GDP, the population of the source country, political co-stability, and a common border have had significant positive influences on bilateral imports. The major contribution of this research is that the Arabic language has a significant and positive impact on trade among MENA countries.
Highlights
International trade patterns depend heavily on unobservable trade costs (Deardorff, 2014)
We explore the effects of language connectedness and the Arabic language on international trade in thirteen countries in the Middle East and North Africa (MENA) region
The empirical results obtained from this study show that the Arabic language can positively affect the volume of bilateral exports, that is, most of the countries in this region are motivated to export with people who speak their language
Summary
International trade patterns depend heavily on unobservable trade costs (Deardorff, 2014). Many factors are affecting international trade, among which languages used in cross-border transactions are underlined. The linguistic factor has been overlooked in prior research and may help find the right answer to solve the Unobserved Trade Cost Puzzle. Empirical findings from prior research, usually using gravity models, reveal that bilateral trade declines with language distance more rapidly that can be accounted for by trade costs that are implicit in price differences across countries and locations. The main purpose of this research is to investigate the role of linguistic variables, Arabic, and language connectedness index on international trade in selected MENA countries by implementing the PPML method in gravity equations. The panel data estimation is used for MENA nations. This is the impetus and contribution of this research
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
