Dissecting carry-along trade: what's in the bundle?
An analysis of carry-along trade (CAT) by Dutch manufacturing exporters employing a refined delineation of CAT-exports.
Replicating the delineation of carry-along trade (CAT) developed by Bernard et al (2012) for the Netherlands, case studies at the firm-product-country level reveal that many sourced export products do not seem to be part of a joint bundle with core exports. We refine the concept of carry-along trade by considering the country dimension and the pervasiveness of product pairs to separate true carry-along trade from more incidental export transactions. The results indicate that one third of all exporting manufacturers enrich their product portfolio by engaging in CAT, accounting for approximately 20 percent of total goods exports. However, the persistence of CAT varies greatly across industries. The most common CAT-product turns out to be packing material. Regression analysis reveals that the productivity premium of CAT increases to a maximum of 10.8 percent for firms with a share of CAT in total exports of 42 percent beyond which it diminishes.