Upcoming KCG Seminar by Victor Gimenez-Perales on Importer-Exporter Connections

With the gradual liberalization trend of the international trade and with the strong technological progress in transportation, information and communication, it has been much less costly for firms to procure resources and intermediate goods needed for better prices abroad, and to sell their products globally. As a result, global value chains (GVCs) have been quickly developed and extended since the 1990s. Although GVC growth has been slowed down since the financial crisis in 2008 due to, for example, the decline in overall economic growth, the rising protectionism and intensifying trade tension, GVCs nowadays are still much more complicatedly built than decades ago.

Firms involved in GVCs are, however, different from each other in various aspects, including, for example how and how intensively they have been integrated into GVCs and also their importer-exporter connections. Firm heterogeneity in such importer-exporter connections is found to have impact on firms’ international trade performance and further on global trade flows. Firms’ importer-exporter connections are themselves not a given fact but a result of a dynamic process than can be affected by firms’ survival probability and the trade value growth of connections.

Against this background, Victor Gimenez-Perales (Postdoc at the Kiel Institute for the World Economy) will give a seminar “The Dynamics of Importer-Exporter Connections” on August 10, 2021 (Tuesday), based on his recent research findings.

Abstract of the paper: I develop an importer-exporter model in which importers differ in productivity, substitutability of inputs and final demand elasticity. Importers invest in expanding the set of potential exporters and choose from which to source. The model delivers three novel predictions. The lower final demand elasticity and the higher substitutability of inputs of an importer: (i) the more likely are connections to be discontinued, (ii) the lower the trade value growth per surviving connection and (iii) the smaller the effects of trade cost shocks. I provide evidence in favour of all these predictions by using customs transaction data from Colombia, with the signing of FTAs as a source of exogenous variation.

The seminar will take place via Zoom at 12:30-13:30 on August 10, 2021 (Tuesday). More information can be found here.