Indirect Trade in Regional Economies (Japanese)

Yasushi Ishikawa, Yukiko Saito and Takaaki Taoka

Policy Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper investigate the role of indirect exporters, i.e., firms which are involved in international trade indirectly through transaction networks, and that of supporting firms of indirect exporters in a regional economy, considering the fact that the ratio of direct exporters in periphery regions is much smaller than that in core regions. The following are the main findings. First, compared to manufacturing firms in the core regions, the size of firms in the periphery regions is smaller and the ratio of direct exporters is smaller even after controlling the firm size. Second, less than 40% of firms in the periphery regions are involved in exporting directly or indirectly and the share of the number of employee, sales, and value added of those firms is 70%-80% in total. Third, indirect exporters through wholesalers are likely to start exporting directly, and the effect is larger in the periphery regions. However, the role of wholesalers in the periphery regions as intermediaries is limited, and most firms tend to export indirectly through wholesalers in the core regions. Fourth, indirect exporters through manufacturing firms are likely to grow faster, and the effect is larger in the periphery regions. Furthermore, direct manufacturing exporters in the periphery regions play an important role. These facts imply the importance of enhancing indirect exporting in the periphery regions where it is difficult to export directly. Matching firms in the periphery regions to exporting wholesalers in the core regions and enforcement of exporting ability of wholesalers in the former might raise the possibility of direct exporting there. Furthermore, a rise in the share of direct exporters in the periphery regions accompanies a rise in the share of high growth indirect exporters through manufacturers there, which leads to growth of the regional economy.

Pages: 34 pages
Date: 2017-03
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Persistent link: https://EconPapers.repec.org/RePEc:eti:rpdpjp:17009

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