original URL -- http://www.voxeu.org/index.php?q=node/7603
English is the dominant language of the Internet, business, and world trade. Do we need another? This column applies an economist’s rationale to the question.
Worldwide, English is indeed the language that is most often used in international contacts and trade. But it is not the only one, as shown by Jacques Melitz (2008) who uses two measures of linguistic distances between trading partners and tries to estimate their effect. ‘Open-circuit communication’ (OCC) demands that the language be either official or widely spoken (at least 20% of the population knows the language). Spanish, for instance, will be an OCC between Bolivia (where 44% of the population knows Spanish) and Mexico (88%). A ‘direct communication’ (DC) language is any language common (that is, spoken by at least 4% in each country) in a pair of countries. In short, Melitz suggests distinguishing between two channels through which the trade-enhancing effect may take place: OCCs that depend on translation (which can be produced as long as there are enough people who can provide it in both countries) and DCs (which enable traders to communicate directly). He finds that ‘direct communication’ has the largest positive effect on trades: A 10% increase in the probability that two citizens, one in country A, the other in B, speak the same language increases their trades by 10%. Other European OCCs also contribute, but somewhat less. However, and interestingly enough, Melitz also shows that English as an OCC is no more effective than other European languages in promoting trade.