Lexical distance and the diffusion of technology

This research shows that linguistic differences can influence the diffusion of technology and income between countries. I use a measure of language similarity known as the normalised Levenshtein distance to show that lexical distances closely track bilateral differences in the adoption intensities of key production technologies. This relationship holds for technologies in the transportation, information technology, steel, telecommunications and health sectors. Linguistic differences also result in larger bilateral gaps in per capita income. These results hold among higher but not low‐income nations, likely because language affects technology transfer only once a threshold level of development is surpassed.