Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform
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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.
DepartmentSloan School of Management
Institute for Operations Research and the Management Sciences (INFORMS)
Brynjolfsson, Erik et al. “Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform.” Management Science, 65, 12 (September 2020): 5449-5956 © 2020 The Author(s)