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Multinational Enterprises and the French Trade Deficit

Author

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  • Pierre Cotterlaz
  • Sébastien Jean
  • Vincent Vicard

Abstract

We assess whether multinational enterprises played a specific role in the deterioration of the French trade balance over 2000-2018. French multinationals contribute positively to the trade balance of goods, contrary to foreign multinationals and domestic firms. Yet their declining surplus, down by nearly 2 percentage points of GDP between 2000 and 2018, explains the deterioration of the French trade balance over the past two decades. Econometric evidence shows that this does not reflect poor specialization by French multinationals in the early 2000s or their takeover by foreign investors, but rather a specific trend in the sectors they dominate, beyond the cost conditions common to all companies in France. Against a background of buildup in French FDIs, these results suggest that the internationalization strategies of French firms have been dominated by offshoring over this period, including to serve the domestic market or previous export markets.

Suggested Citation

  • Pierre Cotterlaz & Sébastien Jean & Vincent Vicard, 2022. "Multinational Enterprises and the French Trade Deficit," CEPII Policy Brief 2022-38, CEPII research center.
  • Handle: RePEc:cii:cepipb:2022-38
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    File URL: http://www.cepii.fr/PDF_PUB/pb/2022/pb2022-38.pdf
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    References listed on IDEAS

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    1. repec:hal:spmain:info:hdl:2441/lmb2g91ru9ipp4r5ubgh2jjtr is not listed on IDEAS
    2. Head, Keith & Mayer, Thierry, 2019. "Misfits in the car industry: Offshore assembly decisions at the variety level," Journal of the Japanese and International Economies, Elsevier, vol. 52(C), pages 90-105.
    3. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    4. Head, Keith & Mayer, Thierry, 2019. "Misfits in the car industry: Offshore assembly decisions at the variety level," Journal of the Japanese and International Economies, Elsevier, vol. 52(C), pages 90-105.
    5. Charlotte Emlinger & Sébastien Jean & Vincent Vicard, 2019. "The Surprising Sluggishness of French Exports: Reviewing Competitiveness and its Determinants," EconPol Policy Reports 14, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. repec:hal:spmain:info:hdl:2441/440rksastq8ibo5nrspvcj7teo is not listed on IDEAS
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    More about this item

    Keywords

    Multinational enterprises; Trade balance; Competitiveness;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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