Domestic and Export Performances of French Firms

33 Pages Posted: 7 Mar 2019

See all articles by José Bardaji

José Bardaji

National Institute of Statistics and Economic Studies (INSEE)

Jean‐Charles Bricongne

Banque de France

Benoît Campagne

National Institute of Statistics and Economic Studies (INSEE)

Guillaume Gaulier

Banque de France

Date Written: March 2019

Abstract

The French trade balance deteriorated almost continuously from the late 1990s to the early 2010s. At the macroeconomic level, French export market share deteriorated while domestic sales kept pace with domestic demand. Does this assessment apply to individual firms? Using microlevel data for French industrial firms over the period 2002–12, we explore the link between domestic and export sales. We show that export and domestic sales have a tendency, albeit slight, to move in opposite directions. This may be due to factors such as deliberate strategies to target a specific market or the presence of production constraints. Addressing the resulting endogeneity issue, our analysis shows that a positive demand shock in the domestic market also leads to an increase in exports. In particular, a 10% increase in domestic demand leads to a 4% increase in exports. This complementarity between markets seems to be driven by small firms and could reflect the existence of liquidity constraints. Increased sales in one market could lessen these constraints by facilitating funding for company development in the export market.

Keywords: demand shocks, domestic sales, Export dynamics

Suggested Citation

Bardaji, José and Bricongne, Jean‐Charles and Campagne, Benoît and Gaulier, Guillaume, Domestic and Export Performances of French Firms (March 2019). The World Economy, Vol. 42, Issue 3, pp. 785-817, 2019. Available at SSRN: https://ssrn.com/abstract=3348007 or http://dx.doi.org/10.1111/twec.12713

José Bardaji (Contact Author)

National Institute of Statistics and Economic Studies (INSEE)

18, Boulevard Adolphe-Pinard
92244 Malakoff Cedex
France

Jean‐Charles Bricongne

Banque de France ( email )

Paris
France

Benoît Campagne

National Institute of Statistics and Economic Studies (INSEE)

18, Boulevard Adolphe-Pinard
92244 Malakoff Cedex
France

Guillaume Gaulier

Banque de France ( email )

Paris
France

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