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

Erik Brynjolfsson, Xiang Hui and Meng Liu

No 24917, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 machine translation system has significantly increased international trade on this platform, increasing exports by 17.5%. Furthermore, heterogeneous treatment effects are all consistent with a substantial reduction in translation-related search 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.

JEL-codes: D8 F1 F14 O3 O33 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-big, nep-exp, nep-ict, nep-int and nep-pay
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Citations: View citations in EconPapers (11)

Published as Erik Brynjolfsson & Xiang Hui & Meng Liu, 2019. "Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform," Management Science, vol 65(12), pages 5449-5460.

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