Indirect Trade and Direct Trade: Evidence from Japanese firm transaction data

This paper attempts to establish stylized facts on direct and indirect trade and its impact on firm performance using firm transaction data of Japanese firms, with the special goal of shedding light on regional aspects and indirect exports/imports. The major findings are: 1) firms in regional areas are smaller in size than those in metropolitan areas, and firms in regional areas are less likely to participate in export or import, even after controlling for firm size; 2) direct and indirect exports and imports in terms of the number of firms, employees, sales values, and value-added represent 40%-70% of the regional economies; 3) indirect exporters in regional areas are likely to become direct exporters, which suggests the effects of learning in terms of procedures for conducting exporting, searching for customers, and gaining information on foreign markets, which is not the case for indirect importers; and 4) both newly started direct export/import firms and newly started indirect export/import firms tend to grow faster. In addition, the size of expansion is greater for direct export/import firms than for indirect ones, and is greater for firms in regional areas compared to metropolitan areas.