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Parisa Kamali
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). I document a set of facts that characterize the dynamic nature of indirect exporting using firm-level data from Vietnam and develop a dynamic trade model with both direct and indirect exporting modes and customer accumulation. The model is calibrated to match the dynamic moments of the data. The calibration yields fixed costs of indirect exporting that are less than a third of those of direct exporting, the variable costs of indirect exporting are twice higher, and demand for the indirectly exported products grows more slowly. Decomposing the gains from indirect and direct exporting, I find that 18 percent of the gains from trade in Vietnam are generated by indirect exporters. Finally, I demonstrate that a dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.
International Monetary Fund. Research Dept.

new direct exporters, the group with indirect experience has a higher average export-to-sales ratio than the group without such experience. What are the mechanisms behind these observations ? These facts are replicated in a small open economy framework in which Vietnam is the home country and the rest of the world is the foreign country. The model builds on earlier research and extends those models to a dynamic setting. There are three types of firms: nonexporters (firms operating domestically), indirect exporters, and direct exporters. These types reflect

Parisa Kamali

Empirical Findings 2.1 Data 2.1.1 The Representativeness of World Bank and SME Surveys 2.1.2 Cross-sectional Characteristics of Indirect Exporters 2.2 Findings on the Persistence of Indirect Exporting 2.3 Findings on the Impacts of Indirect Exporting on the Extensive Margin of Direct Exporting 2.4 Findings on the Impacts of Indirect Exporting on the Export-to-Sales Ratio of Direct Exporting 3 Model 3.1 Consumers 3.2 Firms 3.2.1 Exporting Technologies 3.2.2 Customer Accumulation 3.3 The Problem of the Firm 3.3.1 Price Decision of the Firm 3

Parisa Kamali

of remaining a direct exporter. Second, indirect exporters are more likely to transition to direct exporting in the following years than non-exporters. Finally, among new direct exporters, the group with indirect exporting experience has a higher average export-to-sales ratio compared to the group without such experience. Armed with these facts, I develop a dynamic model of trade with both indirect and direct exporting. I use a small open economy framework in which Vietnam is the home country and the rest of the world is the foreign country. The model builds on

Herman Kamil

which are denominated in—or indexed to—foreign currency, issued domestically or abroad. 19 Information on firms’ export revenues was obtained from income statement data. When this was not available, I used countries’ customs office records or Central Bank’s Balance of Payments trade registries. Together with information on firms’ dollar assets, the export to sales ratio captures the degree to which a company is well-positioned to capitalize on exchange-rate depreciation. 20 This is a substantial improvement over previous studies in the literature that have typically

International Monetary Fund. Research Dept.
It has been two years since the trade tensions erupted and not only captured policymakers’ but also the research community’s attention. Research has quickly zoomed in on understanding trade war rhetoric, tariff implementation, and economic impacts. The first article in the December 2019 issue sheds light on the consequences of the recent trade barriers.
International Monetary Fund

number had risen to 93 in 2008. Table 1 Number of non- ofdi and ofdi firms over time in Chemicals Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 Non -ofdi 436 506 496 578 591 559 517 503 430 ofdi 5 27 37 46 52 65 80 92 93 Table 2 shows summary statistics about these firms. On average, mnc s have bigger values for total assets, gross fixed assets and the exports to sales ratio. However, the average sales is higher for non- ofdi firms. Export intensity is

Herman Kamil
Using a unique dataset with information on the currency composition of firms' assets and liabilities in six Latin-American countries, I investigate how the choice of exchange rate regime affects firms' foreign currency borrowing decisions and the associated currency mismatches in their balance sheets. I find that after countries switch from pegged to floating exchange rate regimes, firms reduce their levels of foreign currency exposures, in two ways. First, they reduce the share of debt contracted in foreign currency. Second, firms match more systematically their foreign currency liabilities with assets denominated in foreign currency and export revenues--effectively reducing their vulnerability to exchange rate shocks. More broadly, the study provides novel evidence on the impact of exchange rate regimes on the level of un-hedged foreign currency debt in the corporate sector and thus on aggregate financial stability.
International Monetary Fund
In the literature on exports and investment, most productive firms are seen to invest abroad. In the Helpman et al. (2004) model, costs of transportation play a critical role in the decision about whether to serve foreign customers by exporting, or by producing abroad. We consider the case of tradable services, where the marginal cost of transport is near zero. We argue that in the purchase of services, buyers face uncertainty about product quality, especially when production is located far away. Firm optimisation then leads less productive firms to self-select themselves for FDI. We test this prediction with data from the Indian software industry and find support for it.
Miss Sonali Das and Mr. Volodymyr Tulin
This paper studies private investment in India against the backdrop of a significant investment decline over the past decade. We analyze the potential causes of weaker investment at the firm level, using both firm-level financial statements and a novel dataset on firms’ investment project decisions, and find that financial frictions have played a role in the slowdown. Firms with higher financial leverage invest less, as do firms with lower earnings relative to their interest expenses. Consistent with the notion of credit constraints leading to pro-cyclical investment, we also find that firms with higher leverage are (i) less likely to undertake new investment projects, (ii) less likely to complete investment projects once begun, and (iii) undertake shorter-term investment projects.