Fact of the Week: AI-Driven Machine Translation Increased eBay's International Trade by 18 Percent

Caleb Foote September 17, 2018
September 17, 2018

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AI-driven machine translation increased eBay’s international trade by 18 percent.

Source: Erik Brynjolfsson, Xiang Hui, and Meng Liu, “Does Machine Translation Affect International Trade? Evidence from a Large Digital Platform,” NBER Working Paper 24917, August 2018.

Commentary: Given that the modern economy tends to be described as globalized and that recent policy debates have been centered on whether globalization has been good at all, it is easy to overlook how much more integrated the world could become and the good that course could bring. Through artificial intelligence, one of the largest barriers to globalization that still exists, language, is beginning to crumble.

In 2014, eBay added a machine learning system to its site to translate posts in foreign languages in real time. Research released last month isolated the introduction of the English-Spanish portion of the system, finding it increased the U.S. exports that eBay facilitated to Spanish-speaking Latin American countries by 18 percent and reduced the prices of exported goods by 3 percent. The researchers observed similar effects in other countries when eBay implemented AI-driven translations for other languages, too. This is compelling evidence that reducing the burdens of translation makes new markets available for both producers and consumers, which increases economic efficiency and welfare worldwide.