Is the Internet bringing down language‐based barriers to international trade?

This paper investigates the interaction between Internet access and language similarities in international trade. We apply recent developments in gravity analysis to bilateral export data from about 205 countries over the period 1954–2014. We find a positive impact of both the Internet and language similarities, but a negative interaction between them in international trade. Our results reveal that the language elasticity of trade is lower when more people have access to the Internet and that the impact of the Internet is lower when the trading partners use similar languages. Our results also pass a number of robustness checks.