Language barriers and the speed of international knowledge diffusion

Language barriers and translation costs are persistent obstacles to communication and have particularly pronounced economic impacts in technical domains. Here we provide causal evidence on the effects of language barriers on the speed and extent of knowledge diffusion by exploiting a change in US patent policy that resulted in earlier disclosure of English-language technical knowledge from Japan. Using a targeted sample of 2,770 citations from US-based inventors to Japanese inventions, we find that language barriers accounted for almost half the diffusion lag of Japan-originating knowledge to US-based inventors, relative to Japan-based inventors. This acceleration is significant only for firms with limited ability to translate (small research and development scale, or little involvement in the Japanese market) and is more pronounced for the diffusion of high-quality inventions, suggesting difficulties in quality-targeted translation. Thus, early publication of patent applications provides a substantial public good for cumulative innovation through accelerated access to translated foreign patents.