Abstract This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity. J.E.L. CLASSIFICATION: F10, F12, F14

In international trade models, it is typically assumed that manufacturers ship their goods directly to their foreign customers. In reality, however, many manufacturers call in trade intermediaries to perform this task for them. Which manufacturers make use of this option? Theory suggests that it is mostly the small firms which are not profitable enough to cover the high fixed costs of building an own distribution network abroad. Large and efficient firms, on the contrary, prefer to export their goods directly. The present paper brings this hypothesis to a test. Using survey data from the World Bank Enterprise Survey conducted in Turkey in 2008, it shows that there is indeed a negative correlation between firm size and the relative importance of intermediated exports. This result is highly robust to the inclusion of a variety of controls, different estimation methods, and different measures of firm size.

Abstract This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. The most productive manufacturing firms export directly while less productive firms export indirectly through an intermediary. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. 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 less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters. JEL codes: F12, F14, D22, L22, L23

For sustainable and inclusive world development ha ls hs

International trade has experienced a Ricardian revival. In this article, we offer a user guide to assignment models that have contributed to this revival, which we will refer to as Ricardo-Roy (R-R) models. ∗Authors ’

We analyze a firm that produces a final good from multiple intermediates that can each be sourced domestically or from a low-wage country. The model explicitly incorporates that sourcing decisions of intermediates are interdepen-dent. Equilibrium predictions depend crucially on a key modeling assumption— the nature of the trade friction that foreign production has to overcome. If pro-duction abroad involves a fixed cost, offshoring one intermediate unambiguously facilitates offshoring of other intermediates. However, if production abroad in-volves incomplete contracts, offshoring one intermediate almost always makes it more difficult to offshore others. We illustrate that the pattern in prices at which successive automotive parts are imported into the U.S. accords bet-ter with the predictions of the incomplete contracting model, except for a few countries with the best governance indicators.

Abstract In many consumer-goods industries retailers have become the gatekeepers of product variety. Manufacturers often have to pay so-called slotting allowances to retailers to obtain shelf space. We construct a general-equilibrium model of manufacturing and retailing in a global economy to study the causes and consequences of this development. We then investigate how the equilibrium in the retailing and manufacturing sectors reacts to shocks such as market integration or technological change. We examine how these shocks affect retail and wholesale prices, retailer product assortment, sales, slotting allowances, the allocation of labor between manufacturing and retailing, as well as social welfare. In the process we identify a novel gain from trade consisting of efficiency gains in the vertical distribution chain. JEL classification: F12, F15, L13

Abstract This paper studies how the Intellectual Property Right (IPR) regime in destination countries influences the way multinationals structure the international organization of their production. In particular, we explore how multinationals divide tasks of different complexities across countries with different levels of IPR protection. The analysis studies the decision of firms between procurement from related parties and from independents suppliers at the product level. It also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties. We combine data from a French firm-level survey on the mode choice for each transaction with a newly developed complexity measure at the product level. Our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries. By studying the interaction between product complexity and the IPR protection, we obtain that (i) for technology-sharing outsourcing IPRs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology, (ii) for non-technologyrelated-outsourcing IPRs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate. Keywords Outsourcing, product complexity, intellectual property rights, technology sharing JEL F12, F23, O34.

publications feature a motif taken from the €5 banknote. NOTE: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. CompNet

Indirect Exporters are defined as firms exporting through a trade intermediary. Despite numerous recent appearances in theoretical work, empirical evidence comparing these firms to uniquely domestic firms and Direct Exporters does not exist. I show that in Eastern Europe these firms do, as predicted by the theoretical literature, lie between domestic firms and Direct Exporters for a range of performance measures. The “Direct Exporter premium” is the more robust finding, while certain ambiguity surrounding the productivity gap between Indirect Exporters and Domestic firms indicates that these two groups may not be as significantly different.