Indirect trade and direct trade: Evidence from Japanese firm transaction data

This paper attempts to establish stylised facts on direct and indirect trade and its relationship with firm performance using firm transaction data of Japanese firms, with the special goal of shedding light on regional aspects of indirect exports/imports. The major findings are as follows: (a) firms in regional areas are smaller in size than those in a metropolitan area, and firms in regional areas are less likely to participate in export or import, even after controlling for firm size; (b) direct and indirect exports/imports in terms of the number of firms, employees, and sales values represent 40%–70% of the regional economies; (c) indirect exporters/importers in the previous period are likely to be direct exporters/importers in the subsequent period, which suggests the effects of learning in terms of procedures for conducting exporting/importing, searching for customers/suppliers, and gaining information on foreign markets; and (d) both direct export/import firms and indirect export/import firms in the previous period tend to have higher firm performance in the subsequent period.