Who Uses Intermediaries in International Trade? Evidence from Firm-level Survey Data

Type Journal Article - The World Economy
Title Who Uses Intermediaries in International Trade? Evidence from Firm-level Survey Data
Author(s)
Volume 36
Issue 8
Publication (Day/Month/Year) 2013
Page numbers 1041-1064
URL http://128.243.80.167/gep/documents/papers/2011/11-25.pdf
Abstract
The present paper uses data from the World Bank Enterprise Survey conducted in Turkey in
2005 to shed light on the firms which use intermediaries in international trade. It lends robust
empirical support to recent theories which suggest that indirect exporters are mostly small
firms which are not profitable enough to cover the high fixed costs of building their own
distribution network abroad. Manufacturers which introduce entirely new products to foreign
markets are more likely to use trade intermediaries, as are firms which produce low quality
goods. In contrast, neither foreign ownership nor credit constraints are correlated with the
choice of export mode. Moreover, firms which rely on trade intermediaries to sell their goods
abroad also do so to source their foreign inputs, implying that the role of intermediaries in
facilitating trade may be larger than previous studies suggest.

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