Working Paper: NBER ID: w17711
Authors: Andrew B. Bernard; Marco Grazzi; Chiara Tomasi
Abstract: This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.
Keywords: Export Intermediaries; International Trade; Firm-Level Data; Trade Volumes; Exchange Rate Fluctuations
JEL Codes: D22; F12; F14; L22; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high market-specific fixed costs (L11) | greater reliance on export intermediaries (F10) |
| poor contracting environments (D86) | greater reliance on export intermediaries (F10) |
| lower fixed costs of intermediaries (D40) | flexibility in adjusting export volumes and product assortments (F10) |
| intermediaries' flexibility (L14) | better response to external shocks (F41) |
| mode of export (F10) | sensitivity of trade flows to currency changes (F31) |