The Role of Intermediaries in Facilitating Trade
We provide systematic evidence that intermediaries play an important role in facilitating trade using a firm-level the census of China's exports. Intermediaries account for around 20% of China's exports in 2005. This implies that many firms engage in trade without directly exporting products. We modify a heterogeneous firm model so that firms endogenously select their mode of export - either directly or indirectly through an intermediary. The model predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for this prediction, and generate new facts regarding the activity of intermediaries.
We thank James Rauch, Peter Schott, Nina Pavcnik, Jon Vogel, David Weinstein, Chong Xiang, and seminar participants at the Columbia's International Trade Colloquium, the NBER China Working Group, and the NBER ITI Winter Meetings. We thank the Social Enterprise Program and the Chazen Institute at Columbia Business School for financial support. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May. citation courtesy of