Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform

By Erik Brynjolfsson, Xiang Hui, Meng Liu. Management Sciences, 2018

309 citations recorded by the source corpus.

Artificial intelligence (AI) is surpassing human performance in a growing number of domains. However, there is limited evidence of its economic effects. Using data from a digital platform, we study a key application of AI: machine translation. We find that the introduction of a new machine translation system has significantly increased international trade on this platform, increasing exports by 10.9%. Furthermore, heterogeneous treatment effects are consistent with a substantial reduction in translation costs. Our results provide causal evidence that language barriers significantly hinder trade and that AI has already begun to improve economic efficiency in at least one domain. This paper was accepted by Joshua Gans, business strategy.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/2c09c089aca61969601bb04486b0e814064dc82a

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In Economics and Econometrics

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Citations in the corpus

De-Globalisation? Global Value Chains in the Post-COVID-19 Age (2020, unknown): “…in GVCs. Similarly, in situations in which language barriers remain significant (e.g., in the provision of certain services), the application of big data and machine learning techniques has the potential to provide much more efficient translation services (see Brynjolfsson et al., 2019).”
Engineering Value: The Returns to Technological Talent and Investments in Artificial Intelligence (2019, methodology): “This is a standard market value regression of the sort in (Hall 1993; Brynjolfsson, Hitt, and Yang 2002; Brynjolfsson et al. 2018).”
Generative AI (2023, unknown): “For example, AI-based translation between different languages is responsible for signiﬁcant economic gains (Brynjolfsson et al. 2019).”