Evaluation of Latvia's re-exports using firm-level trade data

Abstract

We use an anonymized firm-level trade database provided by the Central Statistical Bureau of Latvia to evaluate Latvia's re-exports. By solving a linear maximization problem for each firm-product pair, we obtain estimates of re-export flows and corresponding reexport mark-ups. We find that the share of-re-export flows in the total merchandise exports and imports is significant and follows an increasing trend. The share of re-exports is especially large in such product groups as transport vehicles, plastics, mineral products, and machinery and electrical equipments. The majority of re-export flows are directed to closest neighbours - Lithuania and Estonia - suggesting that Latvia serves as a sort of a regional transport hub. We also find that average re-export mark-ups are sizeable and re-export operations may provide an important contribution to Latvia's GDP.