Evaluating the effects of language on international trade in MENA countries: A gravity-model approach

Main Article Content

Article Sidebar

Published Nov 4, 2021
Fatemeh Rahimzadeh
Bahman P. Ebrahimi


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.

How to Cite

Rahimzadeh, F., & Ebrahimi, B. P. (2021). Evaluating the effects of language on international trade in MENA countries: A gravity-model approach. Journal of Research in Emerging Markets, 3(4), 48–62. https://doi.org/10.30585/jrems.v3i4.696
Abstract 98 | PDF Downloads 52

Article Details


International trade, Arabic language, language connectedness, gravity model, PPML



Al-Jasser, J. A. (2012). Pidginization theory and second language learning/acquisition. Journal of King Saud University-Languages and Translation, 24(2), 71-74.

Alonso-Cortés, Á., & Cabrillo, F. (2012). From merchants to speakers: The common origins of trade and language. The European Journal of the History of Economic Thought, 19(5), 709-732.

Anderson, J. E., & Van Wincoop, E. (2004). Trade costs. Journal of Economic literature, 42(3), 691-751.

Arvis, J.-F., & Shepherd, B. (2013). The Poisson quasi-maximum likelihood estimator: a solution to the ‘adding up’problem in gravity models. Applied Economics Letters, 20(6), 515-519.

Baltakys, K., Baltakienė, M., Kärkkäinen, H., & Kanniainen, J. (2019). Neighbors matter: Geographical distance and trade timing in the stock market. Finance Research Letters, 31. doi:https://doi.org/10.1016/j.frl.2018.11.013

Botha, R. (2006). Pidgin languages as a putative window on language evolution. Language & Communication, 26(1), 1-14.

Chiswick, B. R., & Miller, P. W. (2005). Linguistic distance: A quantitative measure of the distance between English and other languages. Journal of Multilingual and Multicultural Development, 26(1), 1-11.

Church, J., & King, I. (1993). Bilingualism and network externalities. Canadian Journal of Economics, 26(2), 337-345.

Cuypers, I. R., Ertug, G., & Hennart, J.-F. (2015). The effects of linguistic distance and lingua franca proficiency on the stake taken by acquirers in cross-border acquisitions. Journal of International Business Studies, 46(4), 429-442.

Deardorff, A. V. (2014). Local comparative advantage: trade costs and the pattern of trade. International Journal of Economic Theory, 10(1), 9-35.

Debaere, P., Lee, H., & Lee, J. (2013). Language, ethnicity and intrafirm trade. Journal of Development Economics, 103, 244-253. doi:https://doi.org/10.1016/j.jdeveco.2013.02.011

Dyen, I., Kruskal, J. B., & Black, P. (1992). An Indoeuropean classification: A lexicostatistical experiment. Transactions of the American Philosophical society, 82(5), iii-132.

Egger, P. H., & Lassmann, A. (2012). The language effect in international trade: A meta-analysis. Economics Letters, 116(2), 221-224.

Eichler, S., Littke, H. C., & Tonzer, L. (2017). Central bank transparency and cross-border banking. Journal of International Money and Finance, 74, 1-30. doi:https://doi.org/10.1016/j.jimonfin.2017.02.030

Ekanayake, E., & Ledgerwood, J. R. (2009). An analysis of the intra-regional trade in the Middle East and North Africa region. International Journal of Business and Finance Research, 3(1), 19-29.

Goh, S. K., & Tham, S. Y. (2013). Trade linkages of inward and outward FDI: Evidence from Malaysia. Economic Modelling, 35, 224-230. doi:https://doi.org/10.1016/j.econmod.2013.06.035

Grin, F. (2002). Using language economics and education economics in language education policy. Guide for the development of language policies in Europe. From linguistic diversity to plurilingual education. Reference study. Strasbourg: Council of Europe. Language Policy Division.

Hao, Y. (1970). The Comprador in Nineteenth Century China: Bridge Between East and West. Cambridge: Harvard University Press.

Hejazi, W., & Ma, J. (2011). Gravity, the English language and international business. Multinational Business Review, 19(2), 152-167.

Hurmerinta, L., Nummela, N., & Paavilainen-Mäntymäki, E. (2015). Opening and closing doors: The role of language in international opportunity recognition and exploitation. International Business Review, 24(6), 1082-1094.

Kabasakal, H., Dastmalchian, A., Karacay, G., & Bayraktar, S. (2012). Leadership and culture in the MENA region: An analysis of the GLOBE project. Journal of World Business, 47(4), 519-529.

Kedia, B. L., & Reddy, R. K. (2016). Language and cross-border acquisitions: An exploratory study. International Business Review, 25(6), 1321-1332.

Konara, P. (2020). The role of language connectedness in reducing home bias in trade, investment, information, and people flows. Research in International Business and Finance, 52, 101180. doi:https://doi.org/10.1016/j.ribaf.2020.101180

Konara, P., & Wei, Y. (2019). The complementarity of human capital and language capital in foreign direct investment. International Business Review, 28(2), 391-404.

Ku, H., & Zussman, A. (2010). Lingua franca: The role of English in international trade. Journal of Economic Behavior & Organization, 75(2), 250-260. doi:https://doi.org/10.1016/j.iref.2019.11.009

Kuik, O., Branger, F., & Quirion, P. (2019). Competitive advantage in the renewable energy industry: Evidence from a gravity model. Renewable energy, 131, 472-481. doi:https://doi.org/10.1016/j.renene.2018.07.046

Lazaro, D. C., & Medalla, E. M. (2004). English as the language of trade, finance and technology in APEC: An East Asia perspective: Philippine Institute for Development Studies.

Lewis, M., Simons, G., & Fennig, C. (2014). Ethnologue: languages of the world, 17th edn. SIL International, Dallas, TX. Online version: http://www. ethnologue. com.

Lian, Z., Sun, W., Xie, D., & Zheng, J. (2019). Cultural difference and China’s cross-border M&As: Language matters. International Review of Economics & Finance. doi:https://doi.org/10.1016/j.iref.2019.11.009

Liu, Z., Xu, Y., Wang, P., & Akamavi, R. (2016). A pendulum gravity model of outward FDI and export. International Business Review, 25(6), 1356-1371.

Lohmann, J. (2011). Do language barriers affect trade? Economics Letters, 110(2), 159-162.

López-Duarte, C., & Vidal-Suárez, M. M. (2010). External uncertainty and entry mode choice: Cultural distance, political risk and language diversity. International Business Review, 19(6), 575-588.

Melitz, J. (2008). Language and foreign trade. European Economic Review, 52(4), 667-699.

Melitz, J., & Toubal, F. (2014). Native language, spoken language, translation and trade. Journal of International Economics, 93(2), 351-363.

Mufwene, S. (2015). Pidgin and creole languages. International encyclopedia of behavioral and social sciences, 18, 2. doi:https://doi.org/10.1016/B978-0-08-097086-8.52014-5

Niu, J. (2017). A study of the influencing factors of the export trade of Beijing’s cultural creativity industry. American Journal of Industrial and Business Management, 7(1), 69-77.

Oh, C. H., Selmier, W. T., & Lien, D. (2011). International trade, foreign direct investment, and transaction costs in languages. The Journal of Socio-Economics, 40(6), 732-735.

Powell, E. J., & Rickard, S. J. (2010). International trade and domestic legal systems: Examining the impact of Islamic law. International Interactions, 36(4), 335-362.

Pöyhönen, P. (1964). Toward a general theory of international trade: Institute of economics, University of Helsinki.

Selmier II, W. T., & Oh, C. H. (2012). International business complexity and the internationalization of languages. Business Horizons, 55(2), 189-200.

Selmier, W. T. (2016). Why the english-speaking world needs confucius institutes. International Communication of Chinese Culture, 3(2), 261-274.

Selmier, W. T., & Oh, C. H. (2013). The power of major trade languages in trade and foreign direct investment. Review of International Political Economy, 20(3), 486-514.

Silva, J. S., & Tenreyro, S. (2006). The log of gravity. The Review of Economics and statistics, 88(4), 641-658.

Tinbergen, J. (1962). Shaping the world economy; suggestions for an international economic policy.

Yazdani, M., & Pirpour, H. (2020). Evaluating the effect of intra-industry trade on the bilateral trade productivity for petroleum products of Iran. Energy Economics, 86, 103933. doi:https://doi.org/10.1016/j.eneco.2018.03.003