Exporting Through Intermediaries: Impact on Export Dynamics and Welfare
IMF Working Papers, December 27, 2019
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- Exporting Through Intermediaries: Impact on Export Dynamics and Welfare
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Bibliographic details
- Authors: Parisa Kamali
- Published: December 27, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513519876.001
Summary and research question
- Investigates the dynamic nature of indirect exporting using firm-level data from Vietnam.
- Develops a dynamic trade model with both direct and indirect exporting modes and customer accumulation.
- Calibrates the model to match the dynamic moments of the data.
Main empirical and calibration findings
- Fixed costs of indirect exporting are less than a third of those of direct exporting.
- Variable costs of indirect exporting are twice higher.
- Demand for the indirectly exported products grows more slowly.
- Decomposing the gains from indirect and direct exporting, 18 percent of the gains from trade in Vietnam are generated by indirect exporters.
- A dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.
Model features and mechanisms
- Two exporting modes: direct exporting and indirect exporting (via intermediaries).
- Customer accumulation is an explicit component of the dynamic model.
- Calibration targets dynamic moments observed in the Vietnam firm-level data.
Policy-relevant implications
- Indirect exporters account for a nontrivial share of aggregate gains from trade (18 percent in Vietnam), implying policies that affect intermediaries can meaningfully alter welfare outcomes.
- Models or policy assessments that ignore indirect exporting can substantially overestimate welfare gains from trade liberalization (overstated by a factor of two).
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- Working Paper