Intermediaries, Firm Heterogeneity and Exporting Behaviour

In this paper, we present one of the first work on the relation between firm productivity and exporting behaviour in the presence of intermediaries. Using a standard trade framework a la Melitz (2003, Econometrica, 71, 6, 1695) and Chaney (2009, American Economic Review, 98, 4, 1707), we find that the most productive firms have sales in the home country and also exporting directly to foreign countries, followed by firms with sales in the home country and exporting both directly and through intermediaries, by firms with sales in the home country and exporting through intermediaries, and finally by firms with sales in the home country only. These theoretical predictions are borne out in a data set of 12,679 firms in 29 developing economies during the 2002-06 period.