Abstract:

The language barrier – the fact that different countries have different native languages – has been documented in numerous studies as reducing international trade. This paper investigates the possibility that trade partners with no common native language will overcome the language barrier by communicating in a non-native language. In today’s world English is the leading candidate to play this role of a lingua franca. By constructing and then employing a new measure of English proficiency covering more than a hundred countries and spanning 30 years, we show that the ability to communicate in English has a strong effect in promoting trade across the globe. The results thus demonstrate that an acquired proficiency in English can mitigate the impact of historically determined language barriers.