{
  "title": "Exporting Through Intermediaries: Impact on Export Dynamics and Welfare",
  "publication": "IMF Working Papers, December 27, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/12/27/exporting-through-intermediaries-impact-on-export-dynamics-and-welfare-48795",
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  "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).",
  "sections": [
    {
      "heading": "Summary and research question",
      "content": "- Investigates the dynamic nature of indirect exporting using firm-level data from Vietnam.\n- Develops a dynamic trade model with both direct and indirect exporting modes and customer accumulation.\n- Calibrates the model to match the dynamic moments of the data."
    },
    {
      "heading": "Main empirical and calibration findings",
      "content": "- Fixed costs of indirect exporting are less than a third of those of direct exporting.\n- Variable costs of indirect exporting are twice higher.\n- Demand for the indirectly exported products grows more slowly.\n- Decomposing the gains from indirect and direct exporting, 18 percent of the gains from trade in Vietnam are generated by indirect exporters.\n- A dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two."
    },
    {
      "heading": "Model features and mechanisms",
      "content": "- Two exporting modes: direct exporting and indirect exporting (via intermediaries).\n- Customer accumulation is an explicit component of the dynamic model.\n- Calibration targets dynamic moments observed in the Vietnam firm-level data."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- 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.\n- Models or policy assessments that ignore indirect exporting can substantially overestimate welfare gains from trade liberalization (overstated by a factor of two).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/12/27/exporting-through-intermediaries-impact-on-export-dynamics-and-welfare-48795"
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    "Authors: Parisa Kamali",
    "Published: December 27, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513519876.001",
    "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.",
    "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.",
    "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.",
    "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).",
    "**Working Paper**"
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