Introduction of a machine translation system has significantly increased international trade on eBay, increasing exports by 17.5%; heterogeneous treatment effects are all consistent with a substantial reduction in translation-related search costs

Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform. Erik Brynjolfsson, Xiang Hui, Meng Liu. NBER Working Paper No. 24917, Aug 2018. www.nber.org/papers/w24917

Abstract: Artificial intelligence (AI) is surpassing human performance in a growing number of domains. However, there is limited evidence of its economic effects. Using data from a digital platform, we study a key application of AI: machine translation. We find that the introduction of a machine translation system has significantly increased international trade on this platform, increasing exports by 17.5%. Furthermore, heterogeneous treatment effects are all consistent with a substantial reduction in translation-related search costs. Our results provide causal evidence that language barriers significantly hinder trade and that AI has already begun to improve economic efficiency in at least one domain.