Dynamics of Foreign Languages as Lingua Franca in Business and International Trade ()
1. Introduction
Trade has always been connected to the development of humanity. For hundreds of years, trade has significantly influenced economic circumstances, living standards, politics, and other vital indices [1]. The phenomenon of globalization has experienced a significant increase, leading to a growing interest in studying its long-term effects within several academic fields. The primary catalyst for this phenomenon is economic globalization, which has prompted significant scholarly interest in two key areas of study: international trade and cross-border capital movement [2]. Globalization refers to the process by which national economies increasingly interconnect and integrate. This phenomenon occurs due to the convergence of sophisticated communication technologies, efficient logistic technologies, amplified money flows, and the dismantling of trade barriers by national governments [3]. Globalization has led to a great deal of continuing macro-level assessment of many parameters, discussion about the causes, dynamics of processes, rates of change, and final effects of these changes. Business historians have demonstrated that, despite having their roots in the history of many human civilizations, globalization tendencies have been developed through non-linear processes with strongly debated causes and effects [4]. Globalization is a complex process involving social, environmental, and cultural dimensions. It is closely linked to economic mechanisms and includes various aspects of market and production. It is fueled by international trade, communication, and investments. The doctrine of globalization influences the dimensions of the economy, institutions, labor force, finances, and industrial processes. Globalization has led to an increase in international trade over time. As a result, a greater selection of goods and services are now available to both businesses and customers. Presently, businesses cannot disregard globalization, as it presents them with lucrative prospects in overseas marketplaces. The quantity of goods that cross international borders and the amount of jobs associated with them are two measures of a nation’s trade globalization. The ratio of global exports to all national gross domestic product (GDP) is known as trade globalization. Globalization in the trade sector can yield advantages such as accelerated economic expansion and enhanced quality of life. Individuals and businesses are participating in a sharing economy, wherein individuals are not only consumers but also sellers of goods and services. This arrangement leads to increased efficiency, resilience, sustainability, and innovation in using financial and natural resources. Additionally, it fosters stronger and more meaningful personal and social connections among people, resulting in collaborative models of consumption, production, and marketplace creation [5]. Globalization is a prevailing phenomenon that has led to a surge in international trade in the past three to four decades. The term “international trade” refers to the buying and selling of goods and services between businesses and individuals from other nations [3]. One of the critical determinants influencing many political and economic activities is international trade. It affects government spending, boosts market efficiency and results in the revival of social welfare [1]. Due to globalization’s increase in production, exchange, and consumption, people from all walks of life will interact and do business with one another [6]. One of the key challenges businesses face when engaging in international trade is the impact of language barriers, and similarities on the volume and expense of communication. Trade depends on interpersonal connection, determined by how easily people communicate. This communication is facilitated by a shared language, which is more significant than technological aspects [7]. A shared language is essential for effective communication, which is lacking in many cross-cultural business situations [8].
Communications in the business world are dynamic, two-way, multi-factored, and always through a process of transformation. Global communication networks facilitate the direct and indirect interaction of people from various languages and cultural backgrounds. There is an added complexity and variety regarding cross-cultural and cross-lingual business communication [9]. The economic influence of the world’s most crucial trade languages is substantial. Since parties to a transaction cannot conduct their business in a culture, they must do so in a language instead. When two countries with distinct populations participate in bilateral commerce and investment, the negotiators must use a common language or compromise on one. Various factors can contribute to the relevance of languages in business, such as the breadth and depth of its legal framework, the relative ease with which people can communicate in that language compared to others, the economic clout of its native speakers, the linguistic legacies of established businesses, networks, and the demand for those languages [10]. Language exhibits diverse manifestations, encompassing national, corporate, technological, and computerized forms. Understanding the complex interplay between many facets of language and their influence on daily operations is becoming increasingly important in improving global business efficiency [11].
Communication challenges pose a substantial barrier to the facilitation of trade [12]. Evaluating foreign languages has challenges as the metrics used must include several elements, such as the specific languages, nations, and historical periods involved [13]. According to the theory of linguistic relativity, people who speak various languages have vastly diverse worldviews [8]. A comprehensive analysis in international business shows that there are significant gaps in understanding the sector across a variety of dimensions, including theory, statistics, technique, and content [14]. Language barriers are a constant problem for businesses. Differences in national languages are one example of linguistic variety, but there are also intra-lingual forms of variation, such as regional dialects, professional jargon, and firm-specific terminology [15]. Failure to consider the interplay between languages during the research process can lead to what some scholars have described as premature “closure of meaning” [11]. In the worst possible scenarios, an inability to speak the language of business could be misconstrued as an indication of incompetence. Team members from different countries often judge those with less fluency in the common language to be less capable at their jobs. Owing to language barriers, individuals on international teams are often unable to perform their assigned tasks effectively. Misunderstandings due to language barriers can have serious consequences for multiethnic teams [15], while the worldwide business communication landscape is complex and diverse. International businesses are under pressure from competitors to build global communication networks [9]. Given this, it is crucial to know foreign language and cross-cultural communication [6]. The use and management of language have become increasingly imperative in international trade [16].
Previous studies suggested two distinct series for a common language, one geared toward facilitating trade via translation and the other toward facilitating trade via direct communication. The report also analyzes the impact of literacy rates and domestic language variety on international trade [17]. Other studies have emphasized the influence of languages widely spoken on the level of bilateral trade [13]. In addition, some researchers looked at Portuguese exports to determine if there was a connection between language and international trade. They found that sharing Portuguese with a group of countries did not automatically imply exporting more to those countries. However, the study only focused on Portuguese exports when analyzing the impact of language on global trade [7]. In addition, earlier research has examined the linkage between economic and non-economic factors on international trade. An underexplored variable is the linguistic aspect employed during transactions and agreements [18].
The influence of language on global trade is unassailable, and the acquisition of language skills prompts economic expansion [18]. Language studies in international business have expanded rapidly in recent years, but scholars are yet to fully grasp all the dimensions of language [14]. More comprehensive research is required to identify the various contributors to past trade growth [19]. To better grasp the intricate language implications of globalized business environments, it is necessary to combine concepts and approaches from several academic fields, given the interdisciplinary nature of international business [14]. Given this, this research aims to assess the impact of major foreign languages on business and international trade development.
The research procedures are as follows: the paper explores the linkages between “international trade and the advancement of humanity” followed by the “methodology” and the “results and discussions”. The “results and discussions” section entails the “factors that impact the acquisition of a foreign language”, followed by the “foreign languages as shared or common language”, followed by “determinants of international trade” and the “foreign languages: Lingua Franca and international trade”. Likewise, four subsections are built for an in-depth assessment of the impact of English, Chinese, French, and other foreign languages on business and international trade. Recommendations for future advancements in foreign language promotion are outlined in the concluding section.
International Trade and the Advancement of Humanity
International trade has significant effects on social development in all nations, and inequalities in wage costs are arguably a key factor in driving fast globalization. An analysis of social indicators from a consumer standpoint can provide insights into the disparity resulting from trade and raise problems about corporate social responsibility. Research on employment embedded in international trade demonstrates that affluent nations predominantly subcontract low-skilled labor to developing countries [20].
In twentieth century, significant growth in global trade and population led to the inclusiveness of national economies into a global economic framework, commonly referred to as globalization [21]. Trade growth is correlated with future improvements in social wellbeing. Better trade induces more per capita income, which translates to higher literacy, leading to higher longevity [22].
Human capital is crucial for economic growth, with an increase of one percent resulting in a 0.2% rise in income growth. Trade openness promotes economic growth, with a 0.1 enhancement in the human development index, accounting for nearly 20% of the average value. Trade liberalization in Asian economies generates new markets and enhances consumer welfare. Economic growth fosters a higher level of receptiveness towards international trade, with human development positively impacting the willingness to engage in trade. Thus, trade liberalization can positively impact both economic growth and human development [23]. Together with capital, labor, and gross domestic product (GDP) distance, land, and labor endowment, these variables also have a positive and considerable impact on trade volume. A country’s size affects bilateral trade, with population influencing demand and price levels. As the population increases, production costs upsurge, making it less likely to trade goods and services due to higher production costs [24].
Exports of low-tech agricultural and primary items from developing nations and imports of high-tech manufactured goods from developed nations often make up international trade between developed and developing nations. International trade in goods can accelerate economic growth in developing countries by introducing new ideas, promoting economies of scale, and fostering research and innovation. This unidirectional transfer of information from advanced nations to developing countries allows them to adopt new technology, leading to accelerated growth compared to developed nations [25].
International trade significantly impacts global sustainability and human well-being, with developed countries outperforming underdeveloped ones in meeting Sustainable Development Goals (SDG) targets [26].
2. Methodology
According to Ethnologue, the total number of languages in the world is 6912. Many studies employ the gravity model to estimate trade relations using many variables, including the economy’s size, development level, population, and binary independent variables such as common language, common border, and free trade agreements. Only a few prioritize specific languages such as English, German, French, or Chinese [27]. The presence of a shared official language is likely to promote bilateral trade. Consequently, an upwardly skewed assessment of the trade effect of economic integration would probably arise from failing to consider the common-language effect [28].
This research primarily investigates foreign languages, which are commonly spoken in other countries but not in one’s own country. The study did not specifically examine the process of native language acquisition among immigrants or linguistic minorities, who may be concentrated in specific regions [29]. Foreign languages possess the capacity to develop into languages that are commonly used and understood by many people. The narrative overview method is used in this study to evaluate the literature. Science Direct and Google Scholar are the two primary scientific databases used in the review. The initial published literature search started in April 2023. There were no time constraints in gathering as much relevant literature as feasible. In addition, papers presented at conferences and journals were considered. To have a deeper understanding of the subject, it is crucial to consider all of the available knowledge.
A previous study identified 13 significant languages that are widely studied, including Chinese, English, Spanish, Arabic, Russian, French, Portuguese, German, Malay, Japanese, Turkish, Italian, and Dutch. These languages are studied in 193 nations [29]. The world’s top 10 most-spoken languages are Arabic, English, French, German, Hindi, Japanese, Mandarin Chinese, Portuguese, Russian, and Spanish [14]. English has experienced a significant demographic transformation. Prior to that point, English was predominantly spoken as a mother tongue in English-speaking countries and as a language that had become native-like in postcolonial nations. Additionally, it was acquired as a second language in several other regions across the globe. Its most widespread use is as a lingua franca amongst speakers of various first languages, mainly but not limited to non-native English speakers from nations where British colonization was never practiced [30].
The two languages spoken the most throughout the world, Chinese and English, should be studied more than other languages [29]. Based on this, the study focused on three major foreign languages: English, Chinese, and French. The keywords “business”, “business transactions”, “international trade”, “foreign trade”, “foreign languages”, “language”, “English language”, “French”, and “Chinese”, were used to compile publications. These documents were retrieved from the Web of Science database between 1997 and 2024. The study demonstrates that foreign languages significantly boost business and trade worldwide by developing and implementing a new measure of language proficiency covering more nations.
3. Results and Discussion
3.1. Determinants of Foreign Language Acquisition
The language-in-education policy can be categorized into two distinct types: one that focuses on using language as the primary medium of instruction, and another that emphasizes teaching languages as foreign languages [31]. Typically, research in econometrics regarding language acquisition has mostly focused on the choices made by immigrants and linguistic minorities to learn the dominant language of their host country, enhance their employment prospects, and earn potential [29].
Individuals’ approaches to learning foreign languages vary from person to person. Acquiring proficiency in a foreign language brings about a sense of personal satisfaction for individuals who can comprehend and communicate in two, three, or even many languages. Proficiency in multiple languages can offer significant financial benefits. In today’s globalized world, there is a substantial need for foreign language abilities, which can provide numerous advantages in any profession, especially in enterprises involved in international trade [32]. The prominence of foreign languages is increasing due to the demand for translators, interpreters, and intelligence analysts. Learning and mastering foreign languages has always been associated with members of the international business community in applied linguistics [33].
The acquisition of a foreign language is a highly researched topic, with its psychological basis rooted in the distinct characteristics of different learners. The learning process is influenced by several elements, including cognitive factors (mental processes), affective factors (emotions), metacognitive factors (self-awareness and self-regulation), and demographic factors (age, gender, and cultural background) [34] (Figure 1). Social backgrounds favor students’ attitudes, and target language learners exhibit good attitudes toward other dimensions of the educational context [35]. Several factors contributing to the persistence in foreign language acquisition include linguistic aptitude, motivation, academic performance, intellectual and cultural curiosity, language learning methodologies, absence of anxiety, and good views towards the target language community [36]. Internal and external variables can influence the learning process of a foreign language. Internal variables refer to cognitive and affective aspects, including motivation, intelligence, anxiety, and risk-taking abilities. Numerous studies have established a substantial correlation between motivation and competence, and concluded that motivated learners tend to be successful. Motivation is perceived as a catalyst for learning, driving students to overcome challenges encountered while acquiring a foreign language [37]. Motivation in language education has often been overlooked and underestimated. Motivation, especially in foreign language contexts, is of such significance that other factors related to teaching practice appear insignificant in comparison. Considering motivation as the core of language education is crucial due to the harsh reality most English learners face. Enthusiastic students are highly desirable for teachers as they demonstrate a strong willingness to put in effort, set personal objectives alongside classroom goals, concentrate on the current tasks, persist through difficulties without requiring constant encouragement, and may even inspire their peers, fostering a collaborative learning environment [38].
Acquiring proficiency in a foreign language can be enhanced if the student has a positive mindset toward that language. In other words, if the attitude is positive, the ability to learn the language will be strong, but if the attitude is negative, the ability to learn the language will be weak [39]. Extraversion and introversion are two distinct personality traits classified as internal variables. Research has demonstrated that extroverted individuals have a higher aptitude for acquiring a second language than introverted individuals. External variables can be categorized into two main groups. These are curricular and environmental. Social class, native language, teachers, early start, and curriculum are all examples of external variables [37].
Governments can influence citizens’ proficiency in foreign languages through language policies that include teaching the new language in schools or mandating its use in government and business communications [7]. The global significance of the English language has led to widespread interest among non-native speakers who recognize its value and role as an international language. This interest stems from the desire to access modern advancements in sciences and technologies. Individuals who desire to acquire English as a second language exhibit varying degrees of enthusiasm towards the language. Likewise, they aspire to cultivate favorable attitudes to attain more proficient outcomes in English. The relationship between these two ideas—attitudes and motivation—has been identified as a critical concern in studying English language learning. These two notions appear essential for acquiring the English language [39]. People are motivated to study languages because they can use them in their professional, commercial, or social lives afterward [19].
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Figure 1. Determinants of foreign language acquisition [34].
Language acquisition is typically effortless for most individuals from their early childhood [29]. Age has emerged as a significant determinant of successful foreign language acquisition among language learners in recent years. Some adolescents or adults who embark on learning a second language may struggle to attain fluency, but children who were exposed to a second language at a young age appear to be very skilled, akin to native speakers. The linguistic environment is crucial for language learners in the initial stages. Children are adept at acquiring a new language when immersed in a foreign language environment. Young learners possess a significant aptitude for fast, effective, and skillful acquiring second languages. Furthermore, a prevailing assumption among experts is that young infants have superior aptitude for second language acquisition (SLA) compared to teenagers or adults [40]. The attitudes of language learners towards the language they are learning can also have a substantial influence on second language acquisition (SLA) [37]. Due to network externalities, the more people speak a language, the more others want to learn it. However, the larger the population that speaks a language, the less likely its speakers are to learn another language [7]. Foreign language processing adds significantly to the cognitive demands of working in an international business setting, which are already high due to the complexity and novelty of the environment [14]. Reduced-complexity lingua francas offer an alternative to learning a whole language and can facilitate more straightforward communication. To maximize their chances of success in international trade and investment, people from lower-wage countries will often take the time and effort to learn the language of the higher-wage countries. The incentives to immigrate to and learn the language of the country with better wages will also encourage people to do so [10]. Individuals with positive attitudes toward a language, its speakers, and their culture are more likely to succeed in their language-learning endeavors than those with negative attitudes [39].
Several factors influence the acquisition of a foreign language. One of the primary factors that influence language learning is the magnitude of the global population of individuals who speak a foreign language. The second factor is literacy, which serves as an indicator of one’s capacity to acquire knowledge and also promotes the act of learning. Trade is the central focus of this study, serving as the third effect. Engaging in trade with individuals who speak a foreign language enhances speakers’ acquisition of the primary aspect that emerges in trade, which is the diverse motivations for language learning. Suppose there are language learners in a country. In that case, a one-percentage-point rise in the trade share with speakers of that language will result in an approximately 1.4 percentage-point increase in the proportion of language learners in the overall population. An increase of 1% in the trade share with speakers will likewise raise the likelihood of experiencing some beneficial learning, even after accounting for endogeneity. Acquiring knowledge incurs costs, albeit restricted to time and effort. Measuring the cost on a global scale can be done by assessing the disparity between the native and foreign languages. The literacy rate is an additional indicator of the cost of education. Acquiring more education and improving literacy skills can enhance learning and foster the exploration of foreign languages. Individuals with extensive linguistic proficiency have diminished motivation to acquire additional languages. Furthermore, language distances serve as a deterrent to the process of acquiring knowledge. As the gap widens across languages, the process of learning becomes less effective. Learning a foreign language is influenced by the linguistic disparity between one’s native language and the desired language. Differences in literacy rates do not account for a preference for studying one language over the other. When there are trade connections, the total global population of people who speak a particular language can be seen as a reflection of the benefits of learning that language, which includes the ability to socialize with people from other countries and to gain from their cultures and traditions. For individuals involved in international trade, engaging in business with native speakers of the target language decreases the opportunity cost of learning the language. The global prevalence of one’s original language also impacts the acquisition of foreign languages, but in a detrimental manner. When one’s home language is widely spoken worldwide, there is a reduced motivation to acquire a foreign language [29]. Learning a new language is an expense, but the benefits far outweigh any immediate economic returns. Given this, there will be additional economic, academic, and societal gains [19].
3.2. Foreign Languages as Shared or Common Languages
Foreign languages possess the capacity to develop into languages that are commonly used and spoken by many people. Communication between individuals of different nationalities, whether online or offline, would be difficult without a shared language [35].
Common languages and shared cultural norms are well-known elements in economic exchange. Communication is made easier, and transactions are more transparent when everyone speaks the same language. Language has a comparable impact as shared culture, legal standards, or units of measurement. In this regard, engaging in mutually beneficial exchange without these is still feasible, but doing so is typically more expensive, and the result is less predictable. The trade effect of economic integration in the European Union (EU) would likely be overestimated if the common-language effect was not considered. Despite having little impact, trade between nations increases dramatically when their languages are more comparable. Common languages play a significant role in the fixed costs associated with market entry, primarily affecting the wide trade margin. Notably, a shared language between two nations boosts the likelihood of bilateral trade by 10%. One of the strongest arguments favoring further European integration is the potential for increased trade. Research has shown that gains of a similar magnitude are possible with better language abilities [28]. According to theoretical analysis, common language significantly impacts the international economy, both as a means of communication and as a broader basis for externalities and shared culture [41].
3.3. Determinants of International Trade
Multiple factors, including political, economic, and practical considerations, might influence the expansion of international trade. The determinants of international trade are diverse (Table 1), and companies are affected by their decision to engage in international trade through factors such as exchange rates, competitiveness, increasing globalization, tariffs and trade barriers, transportation costs, languages, cultures, and numerous trade agreements [3]. Earlier findings additionally demonstrate that the Gross Domestic Product (GDP), population of the receiving nation, and political stability have substantial and favorable effects on mutual exports. Furthermore, bilateral imports have been notably influenced positively by factors such as GDP, the population of the source nation, political co-stability, and the presence of a common border [18]. For instance, Uganda’s exports were positively and significantly influenced by factors such as Uganda’s GDP, the GDP of its trading partners, the importer’s GDP per capita, the gap in per capita GDP between Uganda and its trading partners, the real exchange rate, the official standard language, and contiguity [42].
Table 1. Elements that impact international trade.
No. |
Elements |
1 |
Government policies |
2 |
Language (common language) |
3 |
Age |
4 |
Competitiveness |
5 |
Globalization |
6 |
Transaction cost |
7 |
Economic factors |
8 |
Population |
9 |
Distance |
10 |
International trade policy |
11 |
Information and communications technology (ICT) |
12 |
Transport connectivity |
13 |
Migrants |
The cumulative impact of multiple shared linguistic characteristics is at least twice as substantial as the influence of a shared official language. The significance of widely spoken languages and their impact on international trade can be attributed to the facilitation of communication [13]. Cost also plays a significant role in trade. The facilitation of international trade can be impeded by the expenses incurred in mitigating linguistic obstacles, as individuals in different countries generally communicate in distinct languages. Commerce barriers encompass many factors, such as transportation costs, tariffs, legal differentiations, and other components that contribute to increased transaction charges, thus, limiting the volume of trade between two nations [12]. Variables such as trade agreements, labor endowments, cultural distance factors, and traditional gravity variables continually show a high likelihood of being included [43].
As the geographical separation between the United States and particular country increases, there is a corresponding decline in the volume of bilateral trade observed between the two nations. Earlier findings suggest that the influence of distance on the export sector is more significant than its effect on the import sector [12]. The significance of institutional and cultural distance has increased in international trade. Cultural distance has a more significant impact on the variation in trade flows between China and the Belt and Road countries compared to institutional distance [44]. Empirical findings demonstrated that a decrease in distance by 10% has resulted in a corresponding gain in trade revenue on the eBay platform by approximately 3.51% [45]. Information and communications technology (ICT) equally influences international trade. Technology enhances productivity and mitigates two prominent obstacles to commerce: distance (in terms of transportability) and associated transaction costs. This is achieved by facilitating efficient mobility and bridging the information gap in remote locations, providing convenient access to knowledge from afar [2]. For every one percent increase in distance, commerce with non-East Asian economies would have decreased by 1.07 percent in 1995 and 1.806 percent in 1985, based on the anticipated distance coefficients. In contrast to inter-regional trade, the calculated distance-related coefficients for intra-East Asian trade are positive and statistically significant, suggesting that the patterns of geographical influence on intra-East Asian trade are different [46]. By reducing nontariff trade obstacles, institutional similarity promotes bilateral trade. Across model settings, geographic closeness and border sharing have a positive and large impact on bilateral trade [47].
On bilateral trade, the colonial past is anticipated to have a favorable and considerable effect [48]. The most significant implication for politics is that more free trade agreements might improve international trade [49]. Considering boosting trade between nations, the above factors need to be considered from a diverse perspective. The economic phenomena of globalization have a considerable impact on the rise of international trade. The expansion of global trade has been shaped by various variables resulting from globalization, including technological advancements, government policies, institutional activities, consumer behavior, heightened competition, and the establishment of new trade agreements [3]. Given this, trade is significantly influenced by geographical proximity to speakers, shared borders, historical connections, and existing economic and political affiliations [29].
3.4. Foreign Languages: Lingua Franca and International Trade
In international trade, a lingua franca could serve the same purpose as having a shared language [47]. A language’s influence is comparable to that of established customs, laws, or measurement standards [28]. Using foreign languages as a shared or common language enhances overall participation and facilitates different types of international trade, partly due to cultural similarities [41]. Trade within East Asia can be facilitated by using a common language known as a lingua franca, which allows people to communicate with each other [46].
The significance of language in facilitating the business of homogeneous items mostly hinges on the ability to engage in direct conversation [50]. Trade between nations that lack a common spoken language, whether it be an official or an acquired foreign language, can be significantly hampered by language obstacles [7]. One or both participants in a business transaction may speak a second language they did not initially speak [19]. The significance of linguistic influences becomes increasingly pronounced when one transitions from the trade of basic to more intricate commodities [13].
For easier communication across nations, it helps if a significant portion of the population speaks the same language. As a result, business between the two countries will become less complicated, less expensive, and more frequent. According to earlier research, there is a direct correlation between the number of people who speak many languages and the volume of goods traded [28]. British exporters experienced a decline in sales due to their inability to provide to their consumers in the language preferred by the customers [11]. European countries, like the Scandinavian ones, with large populations fluent in multiple foreign languages, stand to gain the most from the trade-boosting effect of this factor. An additional 30% - 60% of points can be ascribed to economic and geographical factors. If all European countries had the same level of English proficiency as Scandinavia, trade would increase. Gains of this magnitude are thus attainable at low cost [28]. The rising level of fluency in foreign languages among Europeans may have contributed to a boom in European trade [19].
The ability to communicate in multiple languages is a key factor in international trade, with English playing a particularly significant role [28]. The cultural validity of the English, French, and Spanish languages is high. Despite this, there is a sizable linguistic and cultural gap between the three major languages, with French being the most unified and English the most divergent. International trade and direct communication benefit significantly from a country having a sizable population that is fluent in a language that is not the country’s official language [10]. In addition, the chance of importing is directly influenced by the ability to speak a foreign language [13]. Foreign language proficiency is widespread, particularly in Europe, and these non-native languages are likely to play a significant role in promoting commercial and economic interactions in general. There are large, statistically significant effects of learning a new language, both at the low end of the scale and at the high end. A greater resurgence of foreign languages can be seen in both countries with low communicative probabilities and countries with high communicative probabilities. Even if a language is not recognized as an official language in either country, the fact that enough people in both nations are fluent in it may have an impact on trade between them [28].
Although the impact of the language variable decreases significantly, the coefficient estimates for Ease of Communication remain similarly significant concerning merchandise items. A rise of 1% in the Ease of Communication score is linked to an average increase in service trade volumes ranging from 0.251% to 1.428%. The impact of language on international trade may vary significantly across different sectors of commodities and services. Language proficiency is essential, especially when looking at specific details. This impact is more significant on the trade of high‐technology goods than low-technology goods. Explicit descriptions of many product dimensions, including precise features, materials, functions, and uses, are necessary for trade in highly complex and sophisticated items. Across many model settings, the impact of language familiarity on goods commerce is more significant than the impact of physical distance. Regarding bilateral preferential trade agreements, having a high level of language competence has a beneficial effect on the flow of commodities being traded, except for low-tech products. Even at the disaggregated level, language competency is vital for the service trade, except for transportation services, which are arguably part of trade activities [47].
The English and Chinese languages substantially and positively impact trade [46]. Institutional commonalities between trading partners play a similar role in communication ease in trade. One crucial factor that determines bilateral trade is language competency. Improved English language skills reduce the cost of communication between two trading partners. Comparatively, the impacts on overall trade volumes and goods exports are very close, even though its economic implications on goods exports seem less than those on imports. As long as they have intense levels of communication, nations with remarkable institutional similarity can engage in active trade. Language is a communication medium that fosters social affinities and connectedness between nations, which can lower trade barriers and advance global trade. In international trade, lingua franca like English or Chinese can be a communication channel [47].
3.4.1. Impact of English Language on Business and International Trade
Currently, English is recognized as the lingua franca around the globe. English is widely spoken, read, and comprehended in most global regions. Thanks to this universal language, people worldwide can communicate and feel a sense of belonging to the global community. English is commonly considered the preferred language for numerous worldwide intellectual journals [35], and the significance of English in inter-regional trade is increasing [46]. Communicating directly through English facilitates bilateral commercial flows [47]. The impact of language on commerce validates the conclusion that English is the language of finance, trade, and technology, especially in the Asia-Pacific area. There will be a 1.18-fold rise in trade between Malaysia and any other country if English is used as the trade language [27].
The English language acts as a bridge of communication between countries worldwide. For this reason, fluency in English is essential for success in global business. English proficiency advancements have the potential to increase economic welfare significantly. Even if English is not the native language of the trading partners, having some knowledge of it helps trade [51]. More Europeans speak English than any other language. The average communication rate for 29 European nations selected was 17%. The likelihood that English will be used as a means of communication is more than 50% in several European contexts [19].
Despite controlling for economic size, distance, and English-speaking population, it was shown that commerce between the United States and developing nations had higher levels of exports and imports. The impact on trade is more significant when there is a 10% increase in the population of individuals who speak English as a second language compared to a 10% rise in those who speak English as their first language [12]. The capacity to communicate in English has a substantial and favorable impact on business. The likelihood of communication must be taken into account to quantify this effect. The UK and Ireland have a communicative probability of 0.97, translating into a 2.9-fold boost in commerce over what can be attributed solely to economic and geographic causes. Trade between other nations is also impacted by English proficiency. For instance, it increased trade between the Netherlands and Sweden by 75%, doubling Dutch trade with the UK. Speaking in English promotes trade by about 25% in the EU15, where the average level of English communication is 22%. Even after accounting for other languages, English is still likely to be used in communication [19]. The potential of English as a neutral and widely accessible means of communication for global commerce has been recognized by several individuals [11]. Considering both native speakers and those who speak English as a foreign language, the average probability that two randomly picked persons from two different nations can communicate in English with each other is 22% in the relatively homogeneous sample of 15 EU countries. Because of this, the average trade inside the EU15 has increased by around a fifth. The importance of English in international trade is particularly significant in Europe. In theory, the direction of causation between commerce and language competency might go either way: countries with citizens who can speak well with one another are more likely to trade with one another, but citizens of highly trading countries also have an incentive to learn one another’s languages. Trade is boosted by around a quarter when more people can interact with one another, as the average English communicative probability in the EU15 is 22%. The likelihood of English language communication still stands out when other languages are considered. Once again, the possibility of communicating in English has a substantial, beneficial effect on business [28]. Considering all the European Union member nations, English plays an incredibly essential role in conducting business, and the ability to communicate in a foreign language is a significant factor in international trade [7].
The relevance of foreign language skills in lowering transaction costs is shown by the fact that the effect of English proficiency is analogous to the transport cost elasticity. Bilateral trade significantly increases the likelihood that any two people, picked at random, from different nations will be able to speak well in English. This positive correlation may result from the endogeneity of linguistic competence. A country with a 10% increase in the proportion of its population who primarily speak English would have a corresponding 1.3% increase in imports from the United States and a 1.3% increase in exports to the United States. Compared to the proportion of individuals who possess English as their primary language, the significance of individuals who possess English as a secondary language is 1.75 times greater in imports and 1.3 times greater in exports. After controlling for factors such as distance, population, and GDP, the proportion of individuals who utilize English as a second language emerges as a more substantial determinant for fostering economic relations with the United States [12]. The United States and Indonesia are two close nations, whereas the United States and Singapore are far away nations. Hence, one would anticipate that higher trade flows occur between these two countries (close) based on the usual gravity model. Commerce between the United States and Singapore is reportedly higher than commerce between the United States and Indonesia, according to an empirical finding of the English proficiency effect on trade. The GDPs of Singapore and Indonesia are made up of 2.72% (0.80%) and 6.76% (9.20%) of their respective exports (imports) to the US [47].
The fact that English is used by people from so many different backgrounds may make it a global language of communication. The people of nations where English is not the primary trading language are eager to learn it and use it as their primary trading language due to the enormous advantages of the language (Figure 2). In international trade, individuals who do not speak a significant trade language are more likely to acquire proficiency in English due to the more significant net advantages they stand to gain compared to English speakers who opt to learn another language. In instances where two countries communicate in non-dominant trade languages, it is common for them to embrace English as a lingua franca for doing trade rather than imposing the usage of their languages on their trading partner. This phenomenon prioritizes the use of the English language above other prominent languages used in international trade, thereby amplifying the dominant influence of English compared to other essential trade languages [10].
3.4.2. Impact of Chinese Language on Business and International Trade
Interregional trade is typically more significantly influenced by the Chinese language. Linguistic variations have some influence on global marketing and trade. When someone who speaks the same language knocks on a door, it usually opens more quickly, yet it is not the sole method for establishing trustworthy partnerships. Chinese language’s greater significance in international trade than other languages can be traced to the Chinese diaspora [46]. The influence of ethnic Chinese networks on bilateral trade is significant in terms of quantity and impact. This influence is exerted through several mechanisms, such as the provision of market intelligence, matching and referral services, and enforcing sanctions within the community to discourage opportunistic conduct [52].
Figure 2. Advantages of English language as a lingua franca in international trade [10] [12] [28].
China’s exports transitioned from primary agricultural products to artisanal crafts and intricate engineering products. Simultaneously with these modifications, specific foreign individuals started to acquire substantial proficiency in the Chinese language. In contrast, Chinese traders acquired knowledge of English, enhancing their respective skills in negotiating in either Chinese or English. The usage of both Chinese and English was driven by the complexity of business, replacing simpler, less reliable pidgin. During the 19th century, the prevalence of Chinese and English increased while pidgin declined in usage within China [53].
Expanding trade between China and the United States should encourage Chinese language study in English-speaking nations and English language learning in Chinese-speaking nations. Therefore, a major factor in determining whether English will become more significant than Chinese will be how trade with English speakers changes in China compared to how trade with Chinese speakers changes in England [29]. The product of ethnic Chinese population shares, which serves as a proxy for ethnic Chinese networks, increased bilateral commerce more for differentiated goods than homogenous ones [52]. A previous study investigated the impact of three languages in Malaysia on bilateral exports and found that variables related to the Chinese language had a favorable and highly significant effect on international trade. Chinese is increasingly being used in Malaysia’s foreign trade, particularly with East Asian areas such as Chinese mainland, Taiwan region, Hong Kong SAR, and Singapore. The Chinese language has a more significant size coefficient than English. This indicates that trade increases approximately 2.75-fold when Chinese is employed as the trade language with Malaysian commercial partners [27]. Chinese is spoken as a foreign language in several South Asian nations but is not recognized as an official language [28]. Growing concerns have been raised about language’s role in determining international trade by lowering transaction costs, especially those associated with information costs like translator and interpreter charges. In order to cut costs and improve network communication, a common language (Chinese language) is crucial for bilateral trade. The significance of Chinese as a commerce language cannot be overstated, particularly for Malaysian entrepreneurs who find it an asset to their already superior language skills. It is recommended that officials in the Malaysian Ministry of Education contemplate the inclusion of Chinese language instruction as a third language choice in primary schools. By performing business in Chinese language, Chinese businesses may effectively interact with other Chinese-speaking nations, while also allowing individuals from different racial backgrounds to completely capitalize on this advantage [27].
The relatively low increase in trade of distinct items between countries with ethnic Chinese populations at levels observed in Southeast Asia can be primarily attributed to ethnic Chinese networks, resulting in an estimated average growth of approximately 60% in bilateral commerce. The economic influence of ethnic Chinese networks on bilateral trade is significant [52]. Chinese language proficiency may help foreign business expats acclimatize to life in China [8].
The ability of ethnic Chinese networks to give in-depth knowledge across numerous industries and nations may be an asset compared to private middlemen [52]. The ability to speak multiple languages is advantageous for a country since it facilitates the acquisition of new information and enhances its ability to attract foreign investment and business. Policymakers should see the investment in language instruction as a long-term strategy to expand the future supply of highly trained human capital [27].
3.4.3. Impact of French Language on Business and International Trade
The French language enables regular conversation among the 77 member and observer States and governments of the International Organization of La Francophonie, which span across all continents and have varying levels of development at both ends of the wealth spectrum [54]. In a profoundly interconnected global economy, corporations seek out trading partners wherever possible, necessitating the management of language-related challenges. The presence of language barriers can result in substantial expenses for the exchange of goods and services between nations that lack a shared official language or a commonly spoken foreign language [55]. Among the prominent trade languages, French exhibits a higher degree of monoculturalism, leading individuals engaged in French language acquisition to associate their linguistic endeavors predominantly with France. Consequently, this association is reflected in the foreign direct investment (FDI) activities from France. The models indicate that French and Spanish languages positively impact the foreign direct investment (FDI) aspect. French high-ranking officials with the same ideology in the direction of managed globalization’ were instrumental in shaping the current framework of international trade and investment law and regulations [10].
Multiple studies have demonstrated that speaking French is advantageous in a professional setting. Additionally, proficiency in multiple languages, particularly one used for worldwide communication like French, is a crucial advantage in global competitiveness and economies. Prior studies have examined the present status of the French language in business and finance, its economic significance in the cultural industry, and the current imperative of acquiring proficiency in French to maintain competitiveness in the global job market. Compared to English, the average communicative probability of French is only 3% [19].
As a common language, the French language is the most prominent component contributing to solidarity. The growth rates of the earnings of an individual fully proficient in the French language in German-speaking and Italian-speaking regions of Switzerland ranged from +15% to +26%. In India, individuals learn French personally rather than in response to company requests. In Bombay, employees are encouraged to develop French language skills but are not given financial assistance. The proportion of individuals in China who enroll in French language courses for professional purposes exhibits significant variation, ranging from 8% to 36%. Typically, the percentage of individuals who study French at the behest of their firm ranges from 0% to 2%. French enterprises utilize the French language internationally in approximately 8% of countries where English is the dominant language, mainly when they are in a position to make purchases. China is the primary trading partner for Burkina Faso and Mali among countries outside the La Francophonie, at 6.1% and 8.2%, respectively. Although not a member of La Francophonie, Algeria significantly influences the French language and is an important commercial partner of Tunisia, accounting for 2.41% of their commerce. Italy is Tunisia’s primary non-Francophonie trade partner, accounting for 19.54% of trade. The French language has a significant economic influence across various areas, including culture, the labor market, and international trade [54].
Earlier studies in Ghana revealed that the favorable influence of language literacy on the well-being of women involved in trade is particularly pronounced when the woman is proficient in English and French. Traders with proficiency in English and French languages experience a welfare enhancement of 87.5% greater than their peers who lack proficiency in both languages. French-literate women experience poorer welfare compared to their French-illiterate peers. Furthermore, the mean age of a French-literate female is about 30 years. The results show that literacy in French only negatively impacts the welfare of women who are into business. A vendor who can only communicate in French will likely make less money than her peers who can speak both English and French. Women who are literate in French and engaged in trade experience a 10% decrease in welfare compared to their counterparts. Sellers proficient in French see a significant reduction of 774% in well-being. Nevertheless, they encounter difficulties in effectively attracting and involving customers, which could result in possible financial losses for dealers who are proficient in English. Traders proficient in both English and French perform better than those only proficient in English. This is because language obstacles prompt clients to seek help from traders who can speak French [56].
Although French sales in the domestic market saw a 5 percent fall, there was a significant increase in exports, particularly in Japan, with a maximum growth of 80 percent. The number of French exporters exhibits a positive correlation with French exports. The aggregate sales of French companies have increased by $16.4 million, resulting from a $34.5 million surge in exports and a $18.1 million decrease in domestic sales [57]. Similarly, states can implement specific language regulations to decrease the expenses associated with economic investments. Governments possess the authority to shape the level of language proficiency among the population, enabling them to endorse the addition of new foreign languages to the formal education curriculum, explicitly targeting the desired foreign language. These activities are commonly implemented over a period to achieve political or economic goals by reducing transaction costs [31].
Using languages serves as a means to facilitate international business transactions and as a medium for transmitting cultural values. Currently, French possesses the second most significant benefits, while Spanish (in terms of commerce) and Arabic (in terms of foreign direct investment) exhibit the least advantageous status among the four trade languages [53]. Possessing proficiency in French as a second language enhances one’s personal life and equips individuals for professions that prioritize foreign language abilities, particularly in French, or at the very least, view such skills as highly advantageous for securing positions or employment in an international context. When discussing globalization in all aspects of human existence, it is imperative to consider the role of “communication”, as nothing can be accomplished without effective communication. The significant growth in international trade and commerce has contributed significantly to the country’s social and economic development. As a result, there are ample employment opportunities for young individuals seeking work. This can only be accomplished effectively if the nation prioritizes incorporating foreign language acquisition as a crucial subject that may provide chances for both the country and its individuals. The increasing exposure to worldwide trade and globalization has increased demand for foreign languages. When a country initiates a campaign to acquire foreign languages and promotes the general understanding of these languages among its population, it will serve as a foundation for economic growth and productivity in today’s globalized world [32].
3.4.4. Effect of Other Languages on Business and International Trade
The ability to communicate in a widely spoken trade language has substantial implications for international trade [10]. The coefficient estimate for German language is significantly lower than that for English, but it does seem to promote trade. Therefore, knowledge of German generally increases trade by 5%. In contrast to English, German has a substantially smaller estimated coefficient of trade facilitation [28]. International trade involving German, and Russian has weaker and more inconsistent results. Russian seems to have considerably improved trade compared to other languages [19]. A pidgin that combined English and Chinese with different words and phrases gained significant commercial significance in Asia during the eighteenth century. Under these conditions, the exclusively transactional language known as pidgin emerged, and by the nineteenth century, it had become a prominent trade language. Pidgin is an excellent choice as the trading language because it was relatively free of the cultural, social, and political baggage that came with adopting one of the trading partners’ languages. ‘Language taxes,’ the maturation of China’s economic systems, rising financial incentives to study English, and a phenomenal rise in English-speaking countries’ per-capita earnings all impacted pidgin’s popularity. By the end of the nineteenth century, the United States had the largest national economy in the world, and Great Britain had amassed great wealth from international trade. The average Chinese person’s salary did not grow throughout this time [10]. One would wonder if the prominence of Portuguese as a language of international communication would be reflected in the size of Portugal’s exports [7]. A nation that predominantly utilizes the Portuguese language may encounter limited options for potential trading partners due to the language barrier, leading to a heightened focus on exploiting available chances [50]. In international trade, the other trade languages—Spanish and Arabic—typically do not offer speakers comparable advantages [10].
4. Conclusions
This study assessed the impact of foreign languages on business and international trade. The expansion of global trade has been shaped by various variables resulting from globalization, including technological advancements, government policies, institutional activities, consumer behavior, heightened competition, and the establishment of new trade agreements. One crucial factor that determines bilateral trade is language competency. Language is a communication medium that fosters social affinities and connectedness between nations, which can lower trade barriers and advance global trade. Learning a new language is an expense, but the benefits extend well beyond international trade and other areas. A strong inverse relationship exists between the level of bilateral trade and the presence of linguistic obstacles. The economic influence of the world’s most important trade languages is substantial. The impact of language on international trade is a fundamental problem, hence it is crucial to know foreign languages and cross-cultural communication.
The chance of importing is directly influenced by the ability to speak a foreign language. A more remarkable resurgence of foreign languages can be seen in both countries with low communicative probabilities and countries with high communicative probabilities. Even if a language is not recognized as an official language in either country, the fact that enough people in both nations are fluent in it may impact trade between them. Foreign languages play a significant role in the fixed costs associated with market entry, primarily affecting the wide trade margin. Notably, a shared language between two nations boosts the likelihood of bilateral trade by 10%. A lingua franca, like English or Chinese, can be a communication channel for international trade. The English and Chinese languages have a substantial and positive impact on trade. The impact on trade is more significant when there is a 10% increase in the population of individuals who speak English as a second language, compared to a 10% rise in those who speak English as their first language. A country with a 10% increase in the proportion of its population who primarily speak English would have a corresponding 1.3% increase in imports from the United States and a 1.3% increase in exports to the United States. Interregional trade is typically more significantly influenced by the Chinese language. In the business sector, traders proficient in both English and French perform better than those only proficient in English. The findings indicate that, Governments possess the authority to shape the level of language proficiency among the population, enabling them to endorse the addition of new foreign languages. When discussing globalization in all aspects of human existence, it is imperative to consider the role of “communication”, as nothing can be accomplished without effective communication.
Languages are among the tools that make people unique, and as communication systems get more sophisticated, so do the opportunities they present for advancing language proficiency. The political, societal and economic aftermath of neoliberalism, the exigency of the labor world that stems from it, the attainment of competitiveness, the issues of intercultural communication and the spectrum of ethos induced extensive lens regarding the relevance of foreign languages on the modern world’s growth and networked economy. In this perspective, series of policy recommendations emerge to support the promotion of foreign languages in business and international trade:
Enhancing communication in business and international trade and bridging cultural disparities: Efficient and unequivocal communication sustain global business. Foreign languages constitute a shared platform for traders, entrepreneurs, and state officials through communication and effortless transactions. Language and culture are both sharply entwined. For instance, English, Chinese, Russian and French languages link various cultures in the global marketplace. Thus, using foreign languages enables interaction between citizens with different cultural backgrounds, deepens reciprocal understanding and respect. This interculturality is pivotal for advancing trade networks.
Deepening transnational partnership and homogenizing commercial usages: The use of foreign languages in global marketplace must result in harmonization in trade practices. This standardization can lessen the potential disagreement, miscommunication, and dissension, rationalize and hasten trade practices. In the contemporary world where partnership is imperative, foreign languages streamline dispersal of ideas, information and technologies.
Acknowledging foreign language in academic and acclimatizing to the contemporary world: Multinational, education and training systems must rethink the prospects of plurilingualism and multilingualism by guaranteeing that language courses and skills are aligned with the needs of globalization, by preparing future trade leaders and boosting the competitiveness of the employees for the global market. This supportive attitude regarding foreign languages can result in a language friendly setting where learning and practicing foreign languages are viewed as an asset.
Foreign languages as skills for international citizenship: In the context of globalization, proficiency in foreign languages transcends trade and business skills, it’s the crux of global citizenship. Multilingual individuals provide a better understanding of other cultures, encouraging social inclusion, and benefiting more from the opportunities the global context offers for personal and professional growth.
The prepotency of foreign languages in global business environment sharply shapes international communication dynamics, transcends political, cultural, geographical and linguistic edges, resulting in a conventional basis for trades and states.
Authors’ Contributions
Patience Afi Seglah: Conceptualization, Data curation, Formal analysis, Methodology, Validation, Visualization, Writing—original draft. Komikouma Apelike Wobuibe Neglo: Supervision, Methodology, Validation, Writing—Review & Editing. Jiexuan Huang: Supervision, Resources, Validation, Writing—Review & Editing. Kokou Mawulikplimi Gbemou: Supervision, Methodology, Validation, Writing—Review & Editing.
Conflicts of Interest
The authors declare no conflict of interest.