Abstract: Language policy is not merely symbolic – it shapes the direction of trade, the allocation of subsidies, and a country’s internal cohesion. Using new data on linguistic diversity across and within the US and Canada, this column examines how language affects trade patterns and economic welfare. The authors find that enforcing a single language without supporting bilingualism risks fragmenting the very markets such policies aim to unify. Economic gains arise not from linguistic uniformity, but from enabling shared fluency. A more bilingual society indicates a more integrated, productive, and resilient economy.
Associated Work: "A Dataset on Linguistic Connectivity Across and Within Countries" (2025, Sci Data), "Linguistic Fractionalization, Trade, and Welfare" (forthcoming ECIN)
Dataset repository: https://doi.org/10.7910/DVN/8WGJTL
Abstract: As preferential trade agreements (PTAs) have grown in their scope and complexity, so too has the need to capture this heterogeneity in assessments of their effects. This paper demonstrates an approach for estimating the effects of “deep” PTAs that allows for non-linear impacts from increased depth. It finds that deeper PTAs can increase trade but that there are diminishing—and eventually negative—marginal returns from adding additional policy provisions. This finding fits the observation that certain deep policies may represent new frictions to trade rather than facilitation efforts. To illustrate the potential trade and welfare gains that can be attained by increasing the depth of shallow PTAs, a series of counterfactual simulations are undertaken using the Agadir agreement between Egypt, Jordan, Morocco, and Tunisia as an example. The counterfactual analysis suggests that increasing the depth of the relatively shallow Agadir agreement could increase trade between its members by about 13 percent and the value of their real manufacturing outputs by up to 0.3 percent. Notably, the exercise demonstrates that the optimal version of an agreement is not necessarily the deepest.
Abstract: Technology diffusion and spillovers are key drivers of both innovation and economic growth. This paper examines the role of obtaining initial intellectual property rights on international knowledge flows, specifically through new technological entrants into the United States. We find causal evidence that a foreign technological entrant's initial patent grant in the host country (the United States) increases the likelihood and frequency of international knowledge flows to local U.S. firms and other patenting entities by 29.4 and 6.9 percent, respectively, as measured using forward patent citations. An initial patent grant also leads to a 29.7 percent increase in the probability that an entrant files at least one subsequent patent application within 5 years, suggesting the significant role that an initial grant can have in a firm's sustained technological presence in the host country. Overall, initial intellectual property rights appear to mitigate impediments to cross-border knowledge flows and the benefits of this outweigh frictions arising from the exclusionary nature of the patents.
