More Web Proxy on the site http://driver.im/

research-article

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

Authors: Erik Brynjolfsson, Xiang Hui, Meng LiuAuthors Info & Claims

Management Science, Volume 65, Issue 12

Pages 5449 - 5460

https://doi.org/10.1287/mnsc.2019.3388

Published: 01 December 2019 Publication History

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 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.

This paper was accepted by Joshua Gans, business strategy.

References

[1]

Acemoglu D, Restrepo P (2018) Artificial intelligence, automation and work. NBER Working Paper No. 24196, National Bureau of Economic Research, Cambridge, MA.

[2]

Aghion, 2017Aghion P, Jones BF, Jones CI (2017) Artificial intelligence and economic growth. NBER Working Paper No. 23928, National Bureau of Economic Research, Cambridge, MA.

[3]

Agrawal A, Gans J, Goldfarb A (2018) Exploring the Impact of Artificial Intelligence: Prediction versus Judgment. NBER Working Paper No. 24626, National Bureau of Economic Research, Cambridge, MA.

[4]

Agrawal A, Gans JS, Goldfarb A (2019) Artificial intelligence: The ambiguous labor market impact of automating prediction. NBER Working Paper No. 25619, National Bureau of Economic Research, Cambridge, MA.

[5]

Anderson JE, Van Wincoop E (2003) Gravity with gravitas: A solution to the border puzzle. Amer. Econom. Rev. 93(1):170–192.

[6]

Blum BS, Goldfarb A (2006) Does the Internet defy the law of gravity? J. Internat. Econom. 70(2):384–405.

[7]

Brown JR, Goolsbee A (2002) Does the Internet make markets more competitive? Evidence from the life insurance industry. J. Political Econom. 110(3):481–507.

[8]

Brynjolfsson E, McAfee A (2017) Whats driving the machine learning explosion? Harvard Business Review (July 18), https://hbr.org/2017/07/whats-driving-the-machine-learning-explosion.

[9]

Brynjolfsson E, Mitchell T (2017) What can machine learning do? Workforce implications. Science 358(6370):1530–1534.

[10]

Brynjolfsson E, Smith MD (2000) Frictionless commerce? A comparison of Internet and conventional retailers. Management Sci. 46(4):563–585.

Digital Library

[11]

Brynjolfsson E, Rock D, Syverson C (2019) Artificial intelligence and the modern productivity paradox: A clash of expectations and statistics. Agrawal A, Gans J, Goldfarb A, eds. The Economics of Artificial Intelligence: An Agenda (University of Chicago Press, Chicago), 23–57.

[12]

Callison-Burch C, Osborne M, Koehn P (2006) Re-evaluation the role of Bleu in machine translation research. Proc. 11th Conf. Eur. Chapter Assoc Comput. Linguistics, 249–256.

[13]

Catalini C, Hui X (2017) Can capital defy the law of gravity? Investor networks and startup investment. Working paper, Massachusetts Institute of Technology, Cambridge.

[14]

Cavallo A (2017) Are online and offline prices similar? Evidence from large multi-channel retailers. Amer. Econom. Rev. 107(1):283–303.

[15]

Cowgill B, Dorobantu C (2018) The US-Canada border effect: Evidence from online commerce. Working paper, Columbia Business School, New York.

[16]

Denkowski M, Lavie A (2014) Meteor universal: Language specific translation evaluation for any target language. Proc. 9th Workshop Statist. Machine Translation, 376–380.

[17]

Egger PH, Lassmann A (2012) The language effect in international trade: A meta-analysis. Econom. Lett. 116(2):221–224.

[18]

Einav L, Farronato C, Levin J (2016) Peer-to-peer markets. Annual Rev. Econom. 8:615–635.

[19]

Einav L, Kuchler T, Levin J, Sundaresan N (2015) Assessing sale strategies in online markets using matched listings. Amer. Econom. J. Microeconom. 7(2):215–247.

[20]

Esteva A, Kuprel B, Novoa RA, Ko J, Swetter SM, Blau HM, Thrun S (2017) Dermatologist-level classification of skin cancer with deep neural networks. Nature 542(7639):115–118.

[21]

Farronato C, Fradkin A (2018) The welfare effects of peer entry in the accommodation market: The case of Airbnb. NBER Working Paper No. 24361, National Bureau of Economic Research, Cambridge, MA.

[22]

Goldfarb A, Trefler D (2018) AI and international trade. NBER Working Paper No. 24254, National Bureau of Economic Research, Cambridge, MA.

[23]

Goldfarb A, Tucker C (2017) Digital economics. NBER Working Paper No. 23684, National Bureau of Economic Research, Cambridge, MA.

[24]

Hui X (2019) Facilitating inclusive global trade: Evidence from a field experiment. Management Sci. Forthcoming.

[25]

Hui X, Saeedi M, Shen Z, Sundaresan N (2016) Reputation and regulations: Evidence from ebay. Management Sci. 62(12):3604–3616.

Digital Library

[26]

Hui X, Saeedi M, Spagnolo G, Tadelis S (2018). Certification, reputation and entry: An empirical analysis. NBER Working Paper No. 24916, National Bureau of Economic Research, Cambridge, MA.

[27]

Korinek A, Stiglitz JE (2017) Artificial intelligence and its implications for income distribution and unemployment. NBER Working Paper No. 24174, National Bureau of Economic Research, Cambridge, MA.

[28]

Lam CT, Liu M (2017) Toward Inclusive Mobility: Ridesharing Mitigates Geographical Disparity in Transportation. Working paper, Clemson University, Clemson, SC.

[29]

Lavie A (2010) Evaluating the output of machine translation systems. AMTA Tutorial 86.

[30]

Lendle A, Olarreaga M, Schropp S, Vézina P-L (2016) There goes gravity: ebay and the death of distance. Econom. J. (London) 126(591):406–441.

[31]

Liu M, Brynjolfsson E, Dowlatabadi J (2018) Do digital platforms reduce moral hazard? The case of Uber and taxis. NBER Working Paper No. 25015, National Bureau of Economic Research, Cambridge, MA.

[32]

Lohmann J (2011) Do language barriers affect trade? Econom. Lett. 110(2):159–162.

[33]

Melitz J (2008) Language and foreign trade. Eur. Econom. Rev. 52(4):667–699.

[34]

Melitz J, Toubal F (2014) Native language, spoken language, translation and trade. J. Internat. Econom. 93(2):351–363.

[35]

Mian A, Sufi A (2012) The effects of fiscal stimulus: Evidence from the 2009 cash for clunkers program. Quart. J. Econom. 127(3):1107–1142.

[36]

Molnar A (2013) Language barriers to foreign trade: Evidence from translation costs. Working paper, Vanderbilt University, Nashville, TN.

[37]

Mullainathan S, Spiess J (2017) Machine learning: An applied econometric approach. J. Econom. Perspect. 31(2):87–106.

[38]

Overby E, Forman C (2014) The effect of electronic commerce on geographic purchasing patterns and price dispersion. Management Sci. 61(2):431–453.

Digital Library

[39]

Papineni K, Roukos S, Ward T, Zhu W-J (2002) BLEU: A method for automatic evaluation of machine translation. Proc. 40th Annual Meeting Assoc. Comput. Linguistics (Association for Computational Linguistics), 311–318.

[40]

Sachs JD, Kotlikoff LJ (2012) Smart machines and long-term misery. NBER Working Paper No. 18629, National Bureau of Economic Research, Cambridge, MA.

[41]

Silver D, Huang A, Maddison CJ, Guez A, Sifre L, Van Den Driessche G, Schrittwieser J, etal. (2016) Mastering the game of Go with deep neural networks and tree search. Nature 529(7587):484–489.

Cited By

Kazanci N(2025)Extended topic classification utilizing LDA and BERTopic: A call center case study on robot agents and human agentsApplied Intelligence10.1007/s10489-024-06106-555:5Online publication date: 1-Apr-2025
https://dl.acm.org/doi/10.1007/s10489-024-06106-5
Hui XReshef OZhou L(2024)The Short-Term Effects of Generative Artificial Intelligence on EmploymentOrganization Science10.1287/orsc.2023.1844135:6(1977-1989)Online publication date: 1-Nov-2024
https://dl.acm.org/doi/10.1287/orsc.2023.18441
Sun TYuan ZLi CZhang KXu J(2024)The Value of Personal Data in Internet CommerceManagement Science10.1287/mnsc.2023.482870:4(2645-2660)Online publication date: 1-Apr-2024
https://dl.acm.org/doi/10.1287/mnsc.2023.4828
Show More Cited By

Recommendations

Large aligned treebanks for syntax-based machine translation

We present a collection of parallel treebanks that have been automatically aligned on both the terminal and the non-terminal constituent level for use in syntax-based machine translation. We describe how they were constructed and applied to a syntax- ...
Language Modeling for Syntax-Based Machine Translation Using Tree Substitution Grammars: A Case Study on Chinese-English Translation

The poor grammatical output of Machine Translation (MT) systems appeals syntax-based approaches within language modeling. However, previous studies showed that syntax-based language modeling using (Context-Free) Treebank Grammars was not very helpful in ...
Steps Toward Knowledge-Based Machine Translation

This paper considers the possibilities for knowledge-based automatic text translation in the light of recent advances in artificial intelligence. It is argued that competent translation requires some reasonable depth of understanding of the source text, ...

Comments

Please enable JavaScript to view thecomments powered by Disqus.

Information & Contributors

Information

Published In

cover image Management Science

Management Science Volume 65, Issue 12

December 2019

508 pages

ISSN:0025-1909

DOI:10.1287/mnsc.2019.65.issue-12

Issue’s Table of Contents

Copyright © 2019, INFORMS.

Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 December 2019

Accepted: 18 April 2019

Received: 18 April 2019

Author Tags

Qualifiers

Research-article

Contributors

Other Metrics

View Article Metrics

Bibliometrics & Citations

Bibliometrics

Article Metrics

29
Total Citations
View Citations
0
Total Downloads

Downloads (Last 12 months)0
Downloads (Last 6 weeks)0

Reflects downloads up to 03 Mar 2025

Other Metrics

View Author Metrics

Citations

Cited By

Kazanci N(2025)Extended topic classification utilizing LDA and BERTopic: A call center case study on robot agents and human agentsApplied Intelligence10.1007/s10489-024-06106-555:5Online publication date: 1-Apr-2025
https://dl.acm.org/doi/10.1007/s10489-024-06106-5
Hui XReshef OZhou L(2024)The Short-Term Effects of Generative Artificial Intelligence on EmploymentOrganization Science10.1287/orsc.2023.1844135:6(1977-1989)Online publication date: 1-Nov-2024
https://dl.acm.org/doi/10.1287/orsc.2023.18441
Sun TYuan ZLi CZhang KXu J(2024)The Value of Personal Data in Internet CommerceManagement Science10.1287/mnsc.2023.482870:4(2645-2660)Online publication date: 1-Apr-2024
https://dl.acm.org/doi/10.1287/mnsc.2023.4828
Liu YLou BZhao XLi X(2024)Unintended Consequences of Advances in Matching TechnologiesManagement Science10.1287/mnsc.2023.477070:3(1729-1754)Online publication date: 1-Mar-2024
https://dl.acm.org/doi/10.1287/mnsc.2023.4770
Yang L(2024)Improving Artificial Intelligence Translation Ability Based on Attention Mechanism and Layer Jumping ConnectionProceedings of the 2024 3rd International Conference on Frontiers of Artificial Intelligence and Machine Learning10.1145/3653644.3658509(286-290)Online publication date: 26-Apr-2024
https://dl.acm.org/doi/10.1145/3653644.3658509
Henderson PHu JDiab MPineau J(2024)Rethinking Machine Learning Benchmarks in the Context of Professional Codes of ConductProceedings of the Symposium on Computer Science and Law10.1145/3614407.3643708(109-120)Online publication date: 12-Mar-2024
https://dl.acm.org/doi/10.1145/3614407.3643708
Haftor DCosta-Climent RRibeiro-Navarrete S(2024)Firms’ use of predictive artificial intelligence for economic value creation and appropriationInternational Journal of Information Management: The Journal for Information Professionals10.1016/j.ijinfomgt.2024.10283679:COnline publication date: 1-Dec-2024
https://dl.acm.org/doi/10.1016/j.ijinfomgt.2024.102836
Lu YSusarla ARavindran KMani D(2024)Machine learning approaches to understand IT outsourcing portfoliosElectronic Commerce Research10.1007/s10660-022-09663-424:4(2547-2577)Online publication date: 1-Dec-2024
https://dl.acm.org/doi/10.1007/s10660-022-09663-4
Guo LWang YZhang A(2024)Do AI-Related Papers in Top Management Journals Contribute Greater Academic Impact and More Online Attention?Sustainability and Empowerment in the Context of Digital Libraries10.1007/978-981-96-0868-3_17(202-218)Online publication date: 4-Dec-2024
https://dl.acm.org/doi/10.1007/978-981-96-0868-3_17
Zhou KLu FRuan YJiang XYu L(2023)Research on the Influence and Mechanism of Cross-Border E-Commerce on the Quality of Agricultural Products Exported by ChinaJournal of Global Information Management10.4018/JGIM.32119031:6(1-23)Online publication date: 19-Apr-2023
https://dl.acm.org/doi/10.4018/JGIM.321190
Show More Cited By

View Options

View options

Figures

Tables

Media

View Issue’s Table of Contents