Exporting Through Intermediaries: Impact on Export Dynamics and Welfare

December 27, 2019

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Format: Chicago

Parisa Kamali. Exporting Through Intermediaries: Impact on Export Dynamics and Welfare, (USA: International Monetary Fund, 2019) accessed November 15, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In many countries, a sizable share of international trade is carried out by intermediaries. While large firms tend to export to foreign markets directly, smaller firms typically export via intermediaries (indirect exporting). I document a set of facts that characterize the dynamic nature of indirect exporting using firm-level data from Vietnam and develop a dynamic trade model with both direct and indirect exporting modes and customer accumulation. The model is calibrated to match the dynamic moments of the data. The calibration yields fixed costs of indirect exporting that are less than a third of those of direct exporting, the variable costs of indirect exporting are twice higher, and demand for the indirectly exported products grows more slowly. Decomposing the gains from indirect and direct exporting, I find that 18 percent of the gains from trade in Vietnam are generated by indirect exporters. Finally, I demonstrate that a dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.

Subject: Exports, International trade, Price indexes, Prices, Revenue administration, Tariffs, Taxes, Technology, Trade facilitation

Keywords: Appendix E, Customer accumulation, Enterprise Survey, Exporting status, Exports, Export-to-sales ratio, Fixed cost, Global, Indirect exporter, Indirect exporting, Large firm, Price indexes, Small firm, Tariffs, Trade facilitation, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/302
Stock No:

WPIEA2019302
ISBN:

9781513519876
ISSN:

1018-5941

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