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Compared Performances of French Companies on the Domestic and Foreign Markets

Listed author(s):
  • José Bardaji
  • Jean-Charles Bricongne
  • Benoît Campagne
  • Guillaume Gaulier

In France, the balance of trade has deteriorated almost continuously since the late 1990s to the early 2010s. Many studies have focused on losses in export market share. But how does the performance of French companies stand up on the domestic market? An examination of the macroeconomic data shows that the performance of companies in France has declined fairly sharply in exports, but that this decline has been rather smaller on the domestic market. At the firm level, a given company’s export performance and domestic market performance have a tendency, albeit slight, to move in opposite directions. This may be due to factors such as a deliberate company strategy to target a specific market or the presence of production constraints. However, our analysis shows that a positive demand shock in the domestic market in which the company is present, resulting in a rise in domestic sales, then leads to an increase in exports. This complementarity seems to be driven by small companies 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 second market. Strong domestic demand during the pre-crisis period in France is therefore not an explanatory factor of losses in export market share.

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Paper provided by Directorate General Economic and Financial Affairs (DG ECFIN), European Commission in its series European Economy - Discussion Papers 2015 - with number 024.

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Length: 40 pages
Date of creation: Feb 2016
Handle: RePEc:euf:dispap:024
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