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International Monetary Fund. Research Dept.

Suppose you are a rice farmer in Vietnam with a successful harvest over the past few years. Wouldn’t it be nice to increase your sales and expand your customer base by tapping the international market? But reaching customers directly in a range of countries takes a lot of work and money. What if there were another way: selling your product to a global retailer with name recognition and networks all over the world? Trade intermediaries such as wholesalers and retailers play a significant role in the export sector, in particular for small and medium

International Monetary Fund. Research Dept.

CONTENT Tariffs in a Globalized World: A Gamble Where Everybody Loses Getting the Most out of Trade Liberalization: Evidence from Machine Learning and Threshold Models How to Nurture the Next Generation of Exporters: The Role of Trade Intermediaries The Annual Research Conference 2019: Celebrating 20 Years of Academic Excellence Reading the Sea Leaves: What Do Ship Movements Tell Us about International Trade? Interview with Antonio Spilimbergo, the Research Department’s New Deputy Director For new issues of IMF Research Perspectives

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.
Ms. Hong Liang and Mr. Eswar S Prasad

prices in Hong Kong SAR under the linked exchange rate system. Moreover, the rapid improvement in its neighbors’ competitiveness has posed increasing challenges to Hong Kong SAR’s traditional advantages and position: its role as a traditional trade intermediary is likely to diminish further as the mainland’s trade restrictions are lifted; direct trade relations are established between Taiwan Province of China and the mainland; and more foreign businesses are set up directly on the mainland. Section II, “Economic Integration Between Hong Kong SAR and Mainland China

International Monetary Fund. Asia and Pacific Dept

as a trade intermediary, including as a gateway to Mainland China, global risk sentiment affects local market volatility. Financial conditions have been mostly accommodative since the Great Financial Crisis. However, increased volatility and uncertainty during the European sovereign debt crisis in late 2011 as well as changes to the RMB fixing mechanism in 2015 tightened financial conditions in Hong Kong SAR. 4. Asset market performance – changes in property and equity market valuations in particular – plays a large role in the swings in Hong Kong SAR’s FCI . On

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.
Parisa Kamali

1 Introduction Trade intermediaries account for a non-trivial share of total exports. For example, nearly 20 percent of Chinese and French exports ( Ahn, Khandelwal, and Wei (2011) and Crozet, Lalanne, and Poncet (2013) ), and around 10 percent of U.S. and Italian exports ( Bernard, Jensen, Redding, and Schott (2012b) and Bernard, Grazzi, and Tomasi (2011) ) are carried by intermediaries. Firms that export via intermediaries are known as indirect exporters. Previous empirical research has shown that these exporters tend to be smaller and less productive

Nancy Vandycke

, while the number of small firms grew by nearly the same amount. This size distribution is consistent with the low income level in the CIS-7 countries, in which the vast majority of firms are micro- or small scale. Profile of Activities The private sector is concentrated in low value-added activities, with minimal potential effect on growth: Arbitrage activities . In Uzbekistan, for instance, local trade intermediaries provide inputs for manufacturing companies, owing to the lack of a domestic market for raw material and restrictions on the quantity of