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

Abstract

We thank David Atkin, Andrey Fradkin, Avi Gannamaneni, and Avi Goldfarb for helpful discussions. We also acknowledge the support of the MIT Initiative on the Digital Economy (http://ide.mit.edu/) and thank eBay, especially Brian Bieron, for providing the data for this project. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w24917.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

De-Globalisation? Global Value Chains in the Post-COVID-19 Age

“…Furthermore, rating systems in digital platforms and open distributed ledgers (such as blockchain) enhance verification and monitoring in firm-to-firm relationships, thus reducing informational frictions and opening the door for countries with weak institutions to bypass a key factor limiting their participation in GVCs. Similarly, in situations in which language barriers remain significant (e.g., in the provision of certain services), the application of artificial intelligence, big data and machine learning techniques has the potential to provide much more efficient translation services (see Brynjolfsson et al, 2019). In sum, it does not seem particularly improbable that the unstoppable advance of digital technologies might provide a new tailwind to ensure the continuing growth in GVC activity worldwide.…”

Conceptual Aspects of Global Value Chains

“…Furthermore, digital platforms (via rating systems) and open distributed ledgers (such as blockchain) enhance veri…cation and monitoring, thus reducing informational frictions and opening the door for countries with weak institutions to bypass a key factor limiting their participation in GVCs. Similarly, in situations in which language barriers remain signi…cant (e.g., in the provision of certain services), the application of big data and machine learning techniques has the potential to provide much more e¢ cient translation services (see Brynjolfsson et al, 2019). In sum, one would expect the unstoppable advance of digital technologies to provide a new tailwind to ensure the continuing growth in GVC activity worldwide.…”

Artificial Intelligence: The Ambiguous Labor Market Impact of Automating Prediction

“…In this setting, artificial intelligence predicts how a human would translate a string of characters from one language into another. In one of the first attempts to estimate the economic impact of a commercial deployment of artificial intelligence, Brynjolfsson, Hui, and Liu (2018) measure the effect of an improvement in the quality of translation by an artificial intelligence on the volume of trade conducted on the online platform eBay. The authors find that moving to a translation using artificial intelligence resulted in a 17.5% increase in the volume of trade.…”

“…There are also indirect effects: As some tasks become more efficient, demand for upstream and downstream tasks might change. For example, an artificial intelligence that automates translation on an online trading platform significantly enhances international trade (Brynjolfsson, Hui, and Liu, 2018). The application of this technology not only affects translators, but also the labor involved upstream and downstream on both sides of the trade.…”