Lingua Mercatoria: Language and Foreign Direct Investment

Does language choice attract foreign direct investment (FDI), and if so, how? We argue that language—a dynamic instrument for reducing transaction costs—can influence investors' decision to allocate capital. Potential host countries attract investments by coordinating their domestic language policies—especially those in education—to match the language of the potential FDI investor. We subject our argument to three different tests: (i) a cross-sectional sample of all global Organization for Economic Co-operation and Development investments that employs a newly constructed language-in-education measurement; (ii) a newly assembled time-series cross-sectional data set of all Chinese FDI abroad; and (iii) a detailed case study that uses process tracing to explain Chinese FDI in Indonesia. The results from these tests demonstrate a significant and robust relationship between language and FDI.

语言选择能否吸引外国直接投资（Foreign Direct Investment，FDI）？若能，其作用机制如何？本文提出，语言作为降低交易成本的动态工具，可影响投资者的资本配置决策。潜在东道国可通过协调本国语言政策——尤其是教育领域的语言政策——使其与潜在外国直接投资投资方所使用的语言相匹配，以此吸引投资。本文通过三项不同的实证检验验证上述论点：其一，针对全球所有经济合作与发展组织（Organization for Economic Co-operation and Development，OECD）投资的横截面样本，采用新构建的教育领域语言使用度量指标；其二，针对全部中国对外直接投资全新汇编的时间序列横截面数据集；其三，采用过程追踪法开展详细案例研究，阐释印度尼西亚的中国对外直接投资情况。上述检验结果表明，语言与外国直接投资之间存在显著且稳健的相关关系。