infonet-economy

Even in export-oriented industries, only a handful of firms ship their goods abroad and these firms are systematically different from their purely domestic counterparts. The current picture does not, however, encompass the many firms that export via trade intermediaries or supply exporters with intermediate inputs. This paper uses a new and unique dataset of yearly transactions between all domestic firms in Belgium to unveil the supplier network that underpins export production. We show that even though there are only seven percent of firms that sell goods on foreign markets, more than a third of all firms are within two-transactions distance from foreign demand. Furthermore, these firms perform better than the rest of the economy and there is evidence of hierarchy within the exports supply chain whereby firm performance increases with the foreign demand exposure.