Language barriers and the speed of international knowledge diffusion.

Area of Science:

• Economics
• Innovation Studies
• Intellectual Property

Background:

• Language barriers and translation costs impede communication, particularly in technical fields, leading to economic impacts.
• Knowledge diffusion is crucial for innovation and economic growth, but is often hindered by linguistic obstacles.

Purpose of the Study:

• To provide causal evidence on how language barriers affect the speed and extent of knowledge diffusion.
• To quantify the impact of language barriers on the dissemination of technical knowledge between Japan and the US.
• To assess the role of patent policy changes in mitigating these barriers.

Main Methods:

• Utilizing a change in US patent policy that mandated earlier disclosure of English-language Japanese technical knowledge.
• Analyzing a sample of 2,770 citations from US inventors to Japanese inventions.
• Comparing knowledge diffusion lags between US-based and Japan-based inventors.

Main Results:

• Language barriers were responsible for nearly half of the diffusion lag for Japan-originating knowledge to US inventors.
• The acceleration in knowledge diffusion was significant for firms with limited translation capabilities (small R&D scale, low Japanese market involvement).
• The effect was more pronounced for high-quality inventions, indicating challenges in targeted translation.

Conclusions:

• Early publication of patent applications in English serves as a significant public good.
• Accelerated access to translated foreign patents enhances cumulative innovation.
• Policy changes facilitating earlier disclosure can effectively reduce knowledge diffusion lags caused by language barriers.