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The dynamics of importer–exporter connections

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  • Gimenez-Perales, Victor

Abstract

This paper studies the dynamics of importer–exporter connections when importers source inputs from multiple exporters. I first develop a trade model in which heterogeneous importers invest in expanding the set of potential exporters they know and from which they can source. The model delivers three novel predictions. The lower the degree of substitutability among final goods and the higher the degree of substitutability among inputs of an importer: (i) the lower the growth rate in importer’s connections, (ii) the more likely are connections to be discontinued, and (iii) the lower the trade value growth per surviving connection. I then provide evidence in favor of these predictions by using customs transaction data from Colombia. Finally, I show that the mechanism unveiled in this paper matters for the heterogeneity of the trade adjustment to macroeconomic shocks across sectors.

Suggested Citation

  • Gimenez-Perales, Victor, 2024. "The dynamics of importer–exporter connections," European Economic Review, Elsevier, vol. 161(C).
  • Handle: RePEc:eee:eecrev:v:161:y:2024:i:c:s0014292123002660
    DOI: 10.1016/j.euroecorev.2023.104638
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    More about this item

    Keywords

    Importers; Survival; Connections; Dynamic model;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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