Can English Proficiency Boost International Trade in Services?

Recently, increasing numbers of financial MNEs are adopting English as their in-company official language. This paper attempts to investigate to what extent English proficiency, as the language of global business, can boost international trade in services. To achieve this purpose, this paper estimates the determinants of services trade including language variables with the aggregated and disaggregated data for nine different subsectors of OECD countries. The empirical model is based on a theory-based gravity model derived from Anderson and von Wincoop (2003, 2004). The findings show that English proficiency has a significant influence on services trade, while other languages such as French and German have only weak and mixed effects. In particular, communication, financial, commercial, insurance, and business services are revealed to be the most impacted by the level of English proficiency. The results imply that governments can use their English policies to promote international trade in services.