Abstract

As the United States is the world’s largest market for machinery, it is important to understand what factors impact our trade volume with foreign business partners. Specifically, we investigate how language commonality plays a crucial role in determining our international trade volume in the electric machinery and equipment industry. We pay attention to the official language and the language in education of the U.S.’s trading partners. This study hypothesizes that if a foreign country uses English as their official language, as a medium of instruction, or as a mandatory second language subject in their education system, they will trade higher value of electric machinery and equipment with the U.S. We argue that this complex industry requires high intensity of communication. Thus a language commonality reduces the communication cost used for translation during bilateral transactions. We use the gravity framework to analyze the relationship between language commonality and U.S. international trade of electric machinery and equipment. Results suggest that the official language commonality increases the value of electric machinery and equipment the U.S. exports to foreign countries. Meanwhile, the commonality in language of education increases both exports and imports in that market between the U.S. and foreign trading partners.

Advisor

Moledina, Amyaz

Department

Business Economics

Keywords

language commonality, electric machinery, international trade, gravity model

Publication Date

2016

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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© Copyright 2016 Diep Ngoc Vu