The Impact of Linguistic Distance on China's Exports and OFDI:An Empirical Study Based on Countries along the"Belt and Road"
Based on the panel data of China and 59 countries along the"Belt and Road"from 2003 to 2019,this paper uses the gravity model and instrumental variable approach to study the impact of linguistic distance on China's exports and outward foreign direct investment(OFDI)and further analyzes the solutions to language barriers.The results show that linguistic distance has a significant negative impact on China's exports and investment to countries along the"Belt and Road",and the impact on OFDI is stronger than that on exports.Linguistic distance mainly acts on trade and investment by influencing costs.Compared with high-income countries,linguistic distance has a more significant nega-tive effect on exports and investment between China and low-and middle-income countries.The improvement of human capital in the host country is conducive to weakening the negative effect of linguistic distance on trade and investment.In addition,while China invests along the"Belt and Road",the use of local official languages instead of English is more conducive to removing language barriers and promoting its investment activities.Clarifying the role of language in trade and investment can help reduce language barriers and cultural frictions for Chinese enterprises in their business overseas,which can promote China's exports and investment along the"Belt and Road",thus maintaining sustained and stable growth of China's foreign trade and economic cooperation.
linguistic distanceexportsoutward foreign direct investmentthe Belt and Road Initiative
万方数据
