What did you say? The effect of language distance on international service trade.

Service trade is more heavily dependent on communication than commodity trade because its production and consumption occur simultaneously. "Linguistic distance," a measure of how closely the majority languages of two nations are related, is negatively correlated with the quality of communication between countries. I show that linguistic distance has a significant nonlinear effect on the level of service trade. For example, a change from communication between majority languages Russian and Danish to Russian and Czech, a decrease in linguistic distance, corresponds to a 17.1% increase in service exports. Additionally, the linguistic distance to English has a significant effect on service trade and points to the use of English as a vehicle language for trade. The data show that linguistic distance has a larger effect on service trade while physical distance has a larger effect on commodity trade.