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How Do Firms Organize Trade? Evidence from Ghana

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Author Info
Jens Krüger
Abstract

The literature on firm heterogeneity in international trade posits that only the most productive firms become exporters (Melitz 2003). However, empirical findings suggest that also firms that are not highly productive export. This paper investigates empirically how firms organize their export trade. If selling directly, sunk costs of foreign market entry are arguably very high, so only productive firms can achieve this (Schroeder et al. 2003). Low productivity firms, by contrast, may prefer to export through trading companies, which involves lower sunk costs. Using a firm level panel data set of Ghanaian firms we investigate the relationship between firm productivity and the use of export intermediaries. Our estimation results take simultaneity problems into account and reveal that indeed low productivity firms tend to export through intermediaries

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Paper provided by Kiel Institute for the World Economy in its series Kiel Advanced Studies Working Papers with number 449.

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Length: 22 pages
Date of creation: Feb 2009
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Handle: RePEc:kie:kieasw:449

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Related research
Keywords: export intermediation; firm productivity;

Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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  1. Gordon H. Hanson & Chong Xiang, 2008. "Testing the Melitz Model of Trade: An Application to U.S. Motion Picture Exports," NBER Working Papers 14461, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Francis Teal, 1999. "Why Can Mauritius Export Manufactures and Ghana Not?," The World Economy, Blackwell Publishing, vol. 22(7), pages 981-993, 09. [Downloadable!] (restricted)
  3. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, 05. [Downloadable!] (restricted)
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  4. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June. [Downloadable!] (restricted)
  5. Trabold, Harald & Parvati Trubswetter & Philipp J H Schroder, 2003. "Intermediation in Foreign Trade: When do Exporters Rely on Intermediaries?," Royal Economic Society Annual Conference 2003 206, Royal Economic Society. [Downloadable!]
    Other versions:
  6. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
    Other versions:
  7. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November. [Downloadable!] (restricted)
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  8. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Catherine Pattillo & Måns Söderbom & Francis Teal & Alb, 2004. "Do African Manufacturing Firms Learn from Exporting?," The Journal of Development Studies, Taylor and Francis Journals, vol. 40(3), pages 115-141, February. [Downloadable!] (restricted)
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  9. Amil Petrin & Brian P. Poi & James Levinsohn, 2004. "Production function estimation in Stata using inputs to control for unobservables," Stata Journal, StataCorp LP, vol. 4(2), pages 113-123, June. [Downloadable!]
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